The Commodity Futures Trading Commission has handed two of the most consequential prediction market rulemakings in its history to the White House for review, and the move lands while federal courts are still fighting over who gets to police event contracts in the first place.
On September 28, the Office of Information and Regulatory Affairs received two CFTC submissions tied to event contracts. One, logged as RIN 3038-AF82, is a proposed rule titled “Further Definition of ‘Swap’ to Include Event Contracts.” The other, RIN 3038-AF81, is an interim final rule that would carve casino-style gambling products out of the swap definition. Both titles and procedural stages are public, but the full regulatory text has not yet been published in the Federal Register as of October 1, which means any confident account of the precise definitions would outrun the documents actually available.
Proposed rule versus interim final rule
The procedural distinction between the two submissions matters more than it might first appear. A proposed rule ordinarily goes through a public comment period before anything becomes final. An interim final rule can take effect upon publication, with comments accepted afterward, provided the agency supplies the required justification. Neither measure becomes binding simply because OIRA received it, and review can still change the wording, the timing, or even whether a measure is issued at all.
The pairing, however, tells a story. A broad inclusion of event contracts within the swap definition could support federal derivatives oversight across a wide product family. An exclusion for casino-style gambling products could leave an entire category outside that definition. Where the boundary ultimately sits will determine whether some sports contracts look like federally regulated swaps, state-regulated gambling products, or both under competing legal theories. The titles alone do not reveal whether the agency plans a bright-line sports exclusion, a test based on economic use, or a set of exceptions.
The Sixth Circuit already drew its own line
Three days before the submissions arrived at OIRA, the Sixth Circuit Court of Appeals handed down its September 25 opinion in the Kalshi litigation, addressing state efforts in Ohio and Tennessee to regulate sports-event contracts. The court rejected the platform’s claim that such contracts necessarily qualify as swaps under the federal statute for purposes of displacing state gambling authority. It vacated an injunction in Tennessee and upheld the denial of one in Ohio.
Those are interim litigation outcomes with serious practical effects, not a nationwide final resolution. The Third Circuit’s earlier New Jersey opinion reached a more favorable result for Kalshi’s federal preemption position on a different record, leaving a genuine circuit split. Geography, the specific event contract, and the posture of each case all affect what a platform can lawfully offer while appeals continue.
The statutory construction at stake is not a vocabulary exercise. Congress gave the CFTC authority over swaps and futures on designated contract markets, subject to public interest restrictions for categories that include gaming. A business offering contracts on sports can claim federal exchange supervision. A state can respond that betting on a game is gambling within its police power and outside the federal definition of a swap, or not preempted even where some federal oversight applies. An agency may interpret its governing statute through a rule, but a court decides whether that interpretation fits the statute and how federal law interacts with state law.
From five contracts a year to sixteen hundred
The Commission’s own March advance notice illustrates the scale of the definitional problem. Between 2006 and 2020, designated contract markets certified roughly five new event contracts per year on average. In 2025, they certified approximately 1,600. That is roughly 320 times the old annual average, and it describes a product menu that a review regime built for a handful of listings per year was never designed to handle.
The fresh rules can be read as an attempt to classify that exploding menu. If an inclusion rule defines the event-contract family broadly, the exclusion rule must then specify exactly what keeps casino-style products out. If the exclusion is narrow, states will argue their sports gambling laws still apply. If it is broad, financial exchanges will argue it bars contracts that could serve a genuine hedging purpose. The full definitions will decide whether the CFTC has resolved a category or merely relocated the fight to terms like “gaming,” “economic consequence,” and “public interest.”
What a rule can and cannot do
A new rule could change the arguments in pending cases, but it will not automatically erase prior judicial holdings, cancel state statutes, or grant an exchange a gambling license. The Sixth Circuit analyzed the law and the products before it. Parties may seek reconsideration or higher review, and a court could assess a later rule in a future challenge. Until any of that happens, the September 28 OIRA entries are evidence of regulatory intent, not judicial preemption.
It also matters that the phrase “prediction market” covers an enormous range of products: a contract on a CPI release, a corporate earnings metric, a presidential election, and the winner of a football game can all be structured as yes-or-no payoffs. That payoff shape alone does not settle the statutory character of the product or a state’s gambling interest. The CFTC’s March notice cited price discovery, hedging, public information, and speculation as distinct potential uses, and a single binary settlement can support all four depending on the underlying event and who is trading it.
Congressional pressure is running in parallel. On September 29, House Oversight Chairman James Comer of Kentucky expanded a prediction market insider-trading probe to include Polymarket, Hyperliquid, and PredictIt, sending letters seeking information on how the platforms verify users and detect suspicious trades.
A wait for actual text
For platforms, state regulators, and traders, the practical takeaway is patience. The review entries confirm the CFTC intends to draw the line itself rather than wait for courts to finish the job, but the operative text, the comment windows, and the effective dates remain unpublished. Until the Federal Register carries the actual rules, the operative law of prediction markets in the United States is still being written one court opinion at a time.
two RINs landing at OIRA the same week state AGs are still fighting over event contracts. whichever way this goes, somebody’s jurisdiction argument just got weaker
The AF81 carve-out for casino-style products basically tells the states “we got this” while the courts are still saying nobody has it yet.
proposed rule vs interim final rule is doing a lot of heavy lifting here. if CFTC goes interim final, the public comment period happens after its already in effect
and the sixth circuit drew its own line three days before these even reached OIRA, so whatever boundary the agency picks gets tested in court almost immediately
the sixth circuit basically dared them to draw the line and now OIRA gets it before any court does. AF82 pulling event contracts into swaps while AF81 carves out casino stuff sounds like a lawsuit factory either way it lands
prediction markets got regulated by vibes for two years and now actual definitions show up mid lawsuit. the timing alone lol
Calling it vibes is generous. A 600 person agency leaning on swap definitions from decades old statutes while Polymarket scales anyway.