The Commodity Futures Trading Commission has sent two rules on prediction markets to the White House for review, a move that could cut the ground from under the states suing platforms such as Kalshi and Polymarket.
One would widen the legal definition of a swap to cover event contracts, the yes-or-no bets on elections, sports and corporate news that the platforms sell. The other would carve out what the agency calls casino-style gambling products and declare that event contracts are not gambling.
Both are with the Office of Information and Regulatory Affairs, part of the Office of Management and Budget, which vets federal rules before they are published, The Block and CoinDesk reported on Wednesday.
The timing is not subtle. The Sixth and Eighth Circuits have sided with states on Kalshi’s sports contracts, the Third Circuit with the CFTC, and New Jersey’s attorney general has asked the Supreme Court to settle the split.
A federal rule saying these contracts are swaps rather than bets would hand the platforms a new argument in every one of those cases.
The second rule is in interim final form, meaning it would take effect at once without the usual comment period. Gaming lawyer Daniel Wallach warned that could prompt immediate litigation under the Administrative Procedure Act.
Then there is who is writing it. Chairman Mike Selig is acting alone, because the White House has not nominated anyone to the commission’s four other seats.
A rule written by one commissioner, rushed past public comment and aimed at live court cases may persuade judges less than the agency hopes. Nobody has said when the White House review will finish.
