CFTC sends event-contract rulemaking to White House after court losses
The derivatives regulator has asked the White House to review two draft rules on how prediction markets are defined, as the American Gaming Association and tribal operators press their case against the sector.
The Commodity Futures Trading Commission has submitted two proposed rules to the White House Office of Information and Regulatory Affairs that could reshape how event contracts are regulated in the United States, according to iGaming Business.
The first draft, listed under RIN 3038-AF82, would widen the definition of a swap to explicitly capture event contracts. A swap is currently defined as a transaction tied to an occurrence with a financial, economic or commercial consequence.
A second, separate proposal under review would determine whether swaps can be defined to exclude casino-style products. If adopted, that rule would bar Designated Contract Markets from listing contracts based on games such as blackjack and craps, a move iGaming Business notes would ease concerns among iCasino operators that prediction markets could erode their business.
The filings land shortly after the CFTC suffered setbacks in two circuit courts. Most recently, the Sixth Circuit Court of Appeals overturned a lower court ruling and found in Tennessee's favour, after Kalshi had begun offering event contracts in the state in 2025 on the argument that they met the legal standard for swaps. iGaming Business reports that no timetable has yet emerged for the next steps in the rulemaking process.
The regulatory moves coincided with a renewed show of opposition to prediction markets at the Global Gaming Expo in Las Vegas, where the American Gaming Association and the Indian Gaming Association appeared jointly for a second consecutive year. The AGA has estimated that states have lost more than $1 billion in tax revenue because of the growth of prediction markets.
AGA President Bill Miller rejected arguments from prediction market operators that their contracts function as hedging instruments, telling an opening-day panel that a routine Tuesday night baseball game "does not serve" an economic purpose and amounts instead to sports wagering. He appeared alongside Indian Gaming Association chair David Bean and executive director Jason Giles.
California Nations Indian Gaming Association chair James Siva, also on the panel, pointed to the rapid growth of prediction markets in California and Texas and noted that tribes remain the only lawful operators in California. Miller said he expects the dispute to ultimately reach the Supreme Court but argued that recent lower-court rulings have shifted momentum towards the states, saying: "The only way we lose is if we take our foot off their throat."
Separately, the Protect College Sports Act, sponsored by Texas Senator Ted Cruz, passed the US Senate on Monday by 77 votes to 22 and now moves to the House of Representatives. The bill would let athletic conferences and associations bar college athletes from competing if they take part in sports betting or sports event contracts. Cruz had said in May that protecting integrity across both markets was a priority.
Elsewhere this week, reports emerged that Kalshi is seeking a new funding round of around $1 billion that would value the company at roughly $40 billion, more than double its valuation a year ago.
The debate over player endorsements also surfaced, after San Antonio Spurs centre Victor Wembanyama was asked whether he would endorse a prediction market or sportsbook operator, following deals struck by LeBron James and Giannis Antetokounmpo. Wembanyama said: "Absolutely not, honestly, I think it's very sad to see some players promote it."