U.S. CFTC Sends Two Draft Rules to OMB to Treat Event Contracts as Swaps

Gold Finance reports that the U.S. Commodity Futures Trading Commission (CFTC) on Oct. 1 sent two rules to the White House Office of Management and Budget (OMB) for review. One proposal would fold event contracts into the regulatory definition of "swaps". The second, labeled a "temporary final rule," would carve out "casino-style gambling products" from the swaps definition. OMB received both submissions this week, with document dates of Sept. 28. OMB review is typically the last step before a rule is released for public comment. The temporary final rule would take effect immediately, while still allowing the agency to solicit feedback and make revisions. The filings arrive as the CFTC and several states continue to clash over how prediction markets should be regulated. Event contracts generally involve binary yes-or-no wagers on objectively verifiable outcomes, including sports results and elections. Federal courts have reached conflicting conclusions. Last week, the U.S. Court of Appeals for the Sixth Circuit held that Kalshi's sports contracts are not swaps and should fall under state gambling laws; the Eighth Circuit issued a similar decision. Earlier, the Third Circuit found the CFTC has jurisdiction over prediction markets, setting up a split among circuits. CFTC Chair Mike Selig maintains the agency has exclusive authority over prediction markets. If event contracts are deemed swaps rather than gambling products, states' arguments in multiple suits against platforms such as Kalshi could be weakened. By statute, the CFTC is meant to have five commissioners, but President Trump has not nominated additional members. Selig is currently the sole commissioner and is advancing regulatory and policy actions on his own. OMB disclosures also show the CFTC recently submitted a "pre-rule" to the White House tied to cryptocurrency regulation.