CFTC Submits Event Contract Rules to White House Amid Prediction Market Jurisdiction Dispute

The Commodity Futures Trading Commission (CFTC) has submitted two rules concerning event contracts to the White House Office of Management and Budget (OMB) for review, a move intended to assert federal jurisdiction over prediction markets. The submission, dated September 30, 2026, aims to clarify the regulatory status of these contracts, which are currently the subject of legal challenges from several states, and significant uncertainty remains regarding the outcome of the White House review and potential Supreme Court decisions.

The first rule proposes to amend the definition of a “swap” to explicitly include event contracts, a classification that anchors these products within the Commodity Exchange Act administered by the CFTC. The second measure is an interim final rule designed to exclude “casino-style gambling products” from being classified as swaps. This approach allows the rule to take effect while public comments are still being gathered.

These actions are intended to solidify the CFTC’s claim of exclusive federal jurisdiction over prediction markets, a claim actively disputed by various states. Ohio and Tennessee are engaged in litigation with the CFTC, arguing that sports event contracts violate their state gambling laws. New Jersey has escalated the matter by requesting the Supreme Court to review the fundamental question of jurisdictional authority.

The CFTC’s Division of Market Oversight also issued an advisory on September 22, 2026, highlighting potential manipulation risks in “mention markets.” This advisory follows a notice of proposed rulemaking issued in June 2026, which sought public comment on assessing event contracts tied to specified activities.

The regulatory landscape for event contracts is becoming increasingly crowded. CFTC-registered designated contract markets like Kalshi and Polymarket offer such products, and platforms such as Crypto.com and Robinhood provide similar offerings, expanding the venues where traders can speculate on real-world outcomes.

The submission of these rules to the White House OMB represents a strategic move by the CFTC in its ongoing dispute with states. If the rules clear the OMB review and the proposed rule process is completed, states challenging the CFTC may find themselves arguing against formal federal regulations. However, significant uncertainties remain. It is not yet clear whether the White House OMB will approve the submitted rules, nor is the outcome of the proposed rule process finalized. The exact boundary between a regulated event contract and an excluded casino-style product also presents a new question.

Furthermore, the potential for a Supreme Court ruling looms large. New Jersey’s request for Supreme Court review means the highest court could ultimately decide the jurisdictional question, potentially reshaping the regulatory landscape regardless of the CFTC’s rule-making efforts. The CFTC maintains that it holds exclusive jurisdiction under the Commodity Exchange Act, and these rules are seen as its clearest attempt to assert federal authority over prediction markets.

There are inherent limitations to what these rules can definitively settle on their own. They must first pass White House review, and the proposed rule requires its own distinct process before becoming final. The ongoing legal battles and the potential for a Supreme Court decision introduce further complexity and uncertainty into the future regulation of prediction markets.

Why This Matters

The CFTC has submitted two rules to the White House for review: one proposing to define event contracts as swaps and another to exclude casino-style gambling products from swap classification. The outcome of the White House OMB review remains uncertain.

Broader Context

Several states are fighting the agency in court over whether sports-linked contracts violate state gambling laws, adding to the jurisdictional dispute over prediction markets.