The White House is reviewing two CFTC proposals that could reshape federal oversight of rapidly expanding prediction markets. The proposals would broaden the definition of swaps to cover event contracts. They would also carve casino-style gambling products out of the federal framework. Consequently, the rules could intensify a growing dispute between federal regulators and states.
CFTC Seeks Broader Authority
Prediction platforms such as Polymarket and Kalshi have expanded into markets covering politics, entertainment, corporate events, and sports. However, sports contracts remain the biggest source of regulatory conflict.
The CFTC considers many prediction contracts swaps under federal law. Meanwhile, several states argue that platforms must follow local gambling rules.
Additionally, states have challenged these platforms over licensing, taxation, and age restrictions. The CFTC has responded with legal actions seeking to limit state intervention.
Court Battles Add Pressure
Last week, a federal appeals court allowed Ohio and Tennessee to enforce sports gambling laws against Kalshi. Consequently, the dispute could eventually reach the Supreme Court.
Moreover, the CFTC has recently sent cryptocurrency rulemaking proposals to the White House. That move adds another major regulatory front for the agency.
The casino-related proposal has reached the interim final rule stage. Therefore, the CFTC could face immediate legal challenges if the measure affects sports contracts.
Related: FCA Begins Accepting Crypto Firm Applications Ahead of 2027 Rules
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