CFTC sends White House two rules to lock event contracts under its swap authority

The US Commodity Futures Trading Commission sent two rules on prediction markets to the White House Office of Information and Regulatory Affairs (OIRA) for interagency review, The Block and Decrypt reported, with CoinDesk confirming the submissions. The package is CFTC Chairman Michael Selig's bid to lock event contracts under federal swap authority while states pursue Polymarket and Kalshi under gambling law.

What went to OMB

Two instruments, filed together:

1. Proposed Rule RIN 3038-AF82 — would explicitly bring event contracts under the definition of "swap" in Commodity Exchange Act §1a(47) and its implementing regulations. As a proposed rule, it will publish for public notice-and-comment after OIRA clearance.
2. Interim Final Rule RIN 3038-AF81 — carves out casino-style gambling products from the swap definition. As an interim final rule, it can take effect immediately on Federal Register publication without notice-and-comment, though that path is challengeable under the Administrative Procedure Act.

The pairing is deliberate. Together they say event contracts (yes/no wagers on future outcomes, as offered by Kalshi and Polymarket) are swaps under exclusive CFTC jurisdiction, while roulette-style products are not — so states cannot claim that event contracts are just dressed-up casino gambling within their police power.

The states pushing back

Four state fights are visible in the record:

• New York: Attorney General suit against Polymarket, following an earlier action against Kalshi.
• Ohio and Tennessee: Kalshi lost an appeal that had shielded it from state sports-gambling enforcement in both states.
• New Jersey: AG Jennifer Davenport has petitioned the Supreme Court for review, per The Block's report.

The circuit split on whether event contracts qualify as swaps has been building for months. The CFTC's move to codify the definition itself, rather than wait for litigation, would take the "what is a swap" question out of state and federal court and place it squarely inside the agency's rulemaking record.

Mechanism

The Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps traded on Designated Contract Markets (DCMs) and Swap Execution Facilities. States retain police power over gambling. The whole legal question, on which Kalshi's operating license and Polymarket's US-relaunch plans depend, is which bucket event contracts fall into.

• If they are swaps → federal preemption applies, states cannot enforce anti-gambling law against them, and Kalshi's DCM registration is sufficient.
• If they are gambling → each state can require its own license or ban the product outright.

The proposed rule locks the swap classification into CFTC regulation text. The interim final rule pre-empts the obvious follow-on argument that the definition sweeps in slot-style products the CFTC does not want.

What to watch

1. OIRA clearance timeline. OMB review is nominally 90 days but can be shorter. Publication in the Federal Register is what starts the rules' effect.
2. APA challenge to the interim final rule. RIN 3038-AF81 is the more legally exposed piece; expect New York or New Jersey to sue on notice-and-comment grounds within days of publication.
3. Supreme Court cert grant on New Jersey's petition. A grant before the rules take effect would leapfrog the regulatory record and force the definitional question directly.
4. Polymarket's US posture. Polymarket's ability to operate its US venue under a CFTC DCM depends on the swap classification surviving; a state injunction that treats event contracts as gambling would keep the US market closed.

Context

This is the CFTC — historically the smaller, quieter derivatives regulator — moving faster than the SEC on a live crypto-adjacent question. Whether the White House lets the package publish, or sends it back for revision, is the next signal on how much regulatory ground Kalshi and Polymarket get to keep before the Supreme Court weighs in.