CFTC Proposes New Prediction Market Rules to the White House Amid Jurisdiction Battles

According to Bloomberg, the Commodity Futures Trading Commission is introducing two rules that could "impact litigation over the agency’s jurisdiction over sports-related event contracts." One of these rules goes into effect right away. The agency sent these rules to the White House's Office of Management earlier this week. 

Bloomberg says that one of the rules is marked as "interim final." This rule will amend the "definition of a swap to exclude casino-style gambling products." It will take effect as soon as it's published in the Federal Register. 

The other, titled "proposed rule," would amend the definition of a swap to include event contracts traded at platforms like Kalshi, Polymarket, Rothera, and Novig. 

After submission, the OMB will review the measures, make edits, and send them back to the CFTC. From there, CFTC Chairman Michael Selig will decide whether to release said items for public comment. 

CFTC Sends Prediction Market Rules to White House

Right now, prediction market contracts are treated as swaps. However, sophisticated financial players, agricultural or energy producers, and others have traditionally used them as speculative or hedging instruments, per Bloomberg. Of course, now, prediction market platforms are synonymous with sports contracts, which is a whole new wave of this type of transaction. 

Prediction market platforms don't offer up casino games. Instead, they offer contracts on events such as a sports game or the price of crypto on a certain day.