CFTC Faces Court Rulings on Prediction Market Swap Authority

CFTC's Dual Rule Push Faces Circuit Court Fracture on Prediction Market Authority

Regulators submitted competing definitions to the White House to claim swap jurisdiction over event contracts, but three appellate courts have issued conflicting rulings on whether state gambling law or federal derivatives law applies.

The Research Desk

Gokhshtein Media

October 1, 2026

3 min read

The U.S. Commodity Futures Trading Commission has advanced its assertion of federal authority over prediction markets by submitting two competing rule definitions to the White House on Sept. 28. The moves come as three federal appeals courts have issued contradictory rulings on whether event contracts fall under the Commodity Exchange Act or remain subject to state gambling statutes.

One submission, RIN 3038-AF82, proposes to formally classify event contracts as swaps under federal derivatives law. The second, RIN 3038-AF81, is an interim final rule designed to exclude casino-style gambling products from swap designation.

The distinction matters procedurally. A proposed rule typically requires full notice-and-comment rulemaking before taking effect. An interim final rule can become effective immediately, though the CFTC may solicit feedback and revise it afterward.

The regulatory push collides directly with conflicting circuit court decisions. On Sept. 25, the Sixth Circuit ruled that sports-event contracts offered by Kalshi did not qualify as swaps under the CEA and that the law did not preempt Ohio and Tennessee gambling statutes. An August Ninth Circuit decision in a separate Kalshi case reached the same conclusion: the contracts constitute sports gambling and likely fall outside CFTC jurisdiction.

The Third Circuit, however, previously found that Kalshi was likely to prevail in arguing its sports event contracts were subject to CFTC exclusive jurisdiction—directly contradicting the Sixth and Ninth Circuit holdings.

The core dispute: whether event contracts belong to federal derivatives authority or to state gambling regulators. The CFTC has consistently challenged state regulation of prediction markets; multiple states contend sports-related contracts are gambling.

OMB records classify both rules as "not economically significant," suggesting the agency does not expect annual economic effects exceeding $100 million or material adverse impacts on productivity, competition, employment, or environmental or public health factors.

Neither OMB submission includes the specific rule text, leaving undefined how the CFTC would apply these definitions to particular contracts or platforms. The conflicting appellate decisions and pending rulemaking leave federal and state authority over prediction markets unresolved.