The U.S. Commodity Futures Trading Commission (CFTC) has officially brought prediction markets under federal jurisdiction through two newly issued rules. The move places platforms such as Kalshi and Polymarket under the exclusive authority of the commodities regulator while curbing the reach of state-level gambling regulators.
The CFTC submitted the regulatory proposal to the White House for review late last month. The release of the written rules follows the commission’s decision on October 9, 2026, when it began reclassifying prediction exchanges as swap instruments.
CFTC Chairman Michael Selig emphasized his agency’s stance: “These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction.”
However, Washington’s jurisdictional claim has yet to halt the ongoing legal challenges.
Separating Prediction Contracts from Casino Games
The CFTC structured a dual-track approach through two concurrently issued instruments. The first document is a proposed rule subject to a 30-day public comment period. This rule expands the definition of swaps to encompass event contracts, covering bets tied to politics, sports, cultural phenomena, and weather forecasts.
The second instrument is an interim final rule that takes effect immediately without a waiting period. This transitional regulation draws a clear line: casino-style gambling products, such as sportsbooks and casino games, are excluded from the swap definition. The distinction is designed to separate derivatives-based prediction exchanges from conventional gambling arenas.
Prior to these new rules, regulators across multiple states had filed lawsuits against prediction market operators over illegal gambling allegations. The commodity swap designation provides federal legal shelter for Kalshi and Polymarket.
The CFTC responded to pressure from state authorities by countersuing. The federal agency is turning to the courts to defend its sole jurisdiction over prediction platforms against local regulatory interference.
$1.8 Billion in NFL Bets and the Supreme Court Test
Behind the debate over jurisdictional boundaries, trading volume on prediction exchanges continues to surge. Market records indicate that the total value of NFL betting contracts on prediction platforms had already reached $1.8 billion prior to the announcement of these new rules.
The massive turnover has triggered pushback from sports organizations. The NFL, alongside other entities, has filed lawsuits against Kalshi to challenge the approval of sports game-based contracts.
The conflicting views are now drawing the attention of the U.S. Supreme Court. Judges across various federal courts remain divided on whether event contracts legally meet the criteria for commodity swaps under federal law.
For Kalshi and Polymarket users, the clarity of their accounts and transactions now hinges on the judiciary’s stance: whether judges will uphold the CFTC’s exclusive jurisdiction or allow state authorities to step in with enforcement actions.
Reported by Decrypt.
Previously: CFTC Reclassifies Prediction Exchanges as Swaps - Sole Commissioner Maneuvers Ahead of Supreme Court
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
