CFTC Moves to Classify Prediction Market Event Contracts as Swaps, Excludes Casino Gambling

Published October 10, 2026, 18:37 PKT. Based on CFTC releases 9310-26 and 9309-26 of October 9, 2026, and reporting by CoinDesk, CryptoWatchDaily, CryptoCompass and Particle News.

The Commodity Futures Trading Commission moved on October 9 to settle one of the most contested questions in U.S. derivatives law: whether the contracts traded on prediction markets are swaps under federal jurisdiction or gambling under state law. The agency issued two rules with opposite edges. One would expressly fold event contracts based on sports, politics, culture and weather into the legal definition of a swap, and the other takes effect immediately to carve casino-style gambling out of that same definition.

The two rules Selig signed on Friday

The inclusion measure is a Notice of Proposed Rulemaking, release 9310-26, published October 9. It proposes to further define the term "swap" to include event contracts, which the CFTC said are financial instruments commonly known to the trade as swaps. The proposal is not final: written comments must be submitted via Regulations.gov within 30 days of the proposal's publication in the Federal Register.

The exclusion measure is an interim final rule, release 9309-26, issued the same day. It codifies the CFTC's longstanding position that casino-style gambling products, including sportsbook wagers and casino games, are not derivatives and sit outside the swap definition. Interim final rules become policy immediately upon publication in the Federal Register, and the CFTC left this one open for written comments due 30 days after publication.

Chairman Michael S. Selig said in the inclusion proposal that Americans use event contracts to hedge risks, speculate and provide the public with information about future events, adding that the products are commodity derivatives squarely within the CFTC's regulatory remit under the Commodity Exchange Act and within the agency's exclusive jurisdiction. On the exclusion, Selig said casino-style gambling products are not derivatives, framing the rule as a clarification of the limits of the Commission's remit, just as the agency has done with other products historically regulated by the states, according to Well-Played's account of release 9309-26.

The state lawsuits that set the clock

The twin rulemakings land in the middle of a fast-moving legal fight between the CFTC and several U.S. states that claim sports event contracts offered by platforms such as Kalshi and Polymarket are illegal gambling under state law, according to CoinDesk. Federal appeals courts have split on the question: one decision opposed the states and two supported them, CryptoCompass reported. States and former federal officials submitted their views to the U.S. Supreme Court this week asking it to resolve the dispute, after New Jersey sought review of Kalshi's sports contracts. As MABOnChain reported on October 9, the NFL backed New Jersey's request, urging the Court to rule that Kalshi's sports contracts are gambling rather than swaps.

The CFTC had already pushed the rules through the White House review process in late September and moved to publish them on October 9, Particle News reported.

A courtroom strategy, analysts say

TD Cowen policy analyst Jaret Seiberg wrote in a Friday client note that the interim final rule is aimed at the courts, not the market, CryptoWatchDaily reported. Seiberg wrote that the rule is designed to improve the agency's position in court, since the states are arguing that the CFTC's definition of a swap would make federally illegal any wager made at a state or tribal casino or sportsbook. The states' argument sits at the center of the litigation, and the CFTC's moves would not automatically resolve those cases, CryptoWatchDaily reported.

What changes for Kalshi and Polymarket

If the inclusion proposal becomes final, event contracts would face federal derivatives duties such as exchange registration, trade reporting and market surveillance, instead of state gambling laws, Particle News reported. The platforms favor federal oversight: Kalshi is aligned with the CFTC's view and has argued it should have only one regulator, and Polymarket sued Massachusetts in February to assert the CFTC's exclusive authority over its markets, CryptoWatchDaily reported.

For the market, the near-term picture is uncertainty: the interim exclusion takes effect now, the inclusion rule faces a 30-day comment window and likely court challenges, and the split appellate rulings mean the dispute could return to higher courts, Particle News reported.

This article is news reporting and is not investment advice.

Sources

• CFTC press release 9310-26, "CFTC Seeks Public Comment on Notice of Proposed Rulemaking Concerning the Inclusion of Certain Event Contracts in the Definition of Swap" (Oct. 9, 2026), primary source
• CFTC release 9309-26, interim final rule excluding casino-style gambling products from the definition of swap (Oct. 9, 2026), primary source
• CoinDesk, "U.S. CFTC moves to fold event contracts into swaps regulations as legal fight rages" (Oct. 9, 2026), secondary source
• CryptoWatchDaily, "CFTC event contracts rule: swaps definition redrawn" (Oct. 9, 2026), secondary source
• CryptoCompass, "CFTC moves to fold event contracts into swaps rules as legal fight rages" (Oct. 9, 2026), secondary source