CFTC files two rules to redefine “swap” after courts split on Kalshi

The Commodity Futures Trading Commission filed two rules with the Office of Information and Regulatory Affairs on September 28, 2026, that would reshape what the agency treats as a “swap.” One is a proposed rule that would broaden the definition to include event contracts; the other is an interim final rule that would explicitly exclude casino-style gambling products. The agency has not yet published the text of either filing and has classified neither as economically significant.

Why the CFTC is targeting the swap definition

The definition of “swap” sits at the centre of a jurisdictional fight over prediction markets. Under the Commodity Exchange Act, swaps fall under the exclusive jurisdiction of the Commodity Futures Trading Commission. If an event contract is a swap, federal oversight applies and state gambling regulators have less authority to intervene. The two filings move the CFTC toward drawing a federal boundary: event-based contracts within the swap definition and casino-style games outside it.

The timing matters. On September 25, 2026, a three-judge panel of the United States Court of Appeals for the Sixth Circuit ruled unanimously that Kalshi had not met its burden to show its sports contracts are swaps, allowing Ohio and Tennessee to apply state gambling laws to those products. The Sixth Circuit concluded the contracts “do not depend on events tied to a financial, economic or commercial consequence.” The Ninth Circuit reached a similar conclusion in a Nevada case the previous month. By contrast, the United States Court of Appeals for the Third Circuit issued a 2–1 ruling for Kalshi in April 2026. That circuit split increases the likelihood the Supreme Court will resolve the question.

How the filings map onto the court split and judicial doctrine

Dodd-Frank expressly allows the CFTC to define "swap." But the Supreme Court’s 2024 decision in Loper Bright reduced the degree of judicial deference agencies receive on questions of statutory meaning. A new CFTC rule would therefore become an additional legal argument for judges to weigh, not an automatic trump over competing statutory readings. Courts will still independently interpret whether a given contract qualifies as a swap, but the rulemaking could influence those interpretations.

The proposed rule and interim final rule together appear to delineate a narrower federal lane for prediction markets: sports and other event contracts would sit inside the swap definition; casino-style products would fall outside it. The interim final rule has practical force because it can take effect without prior public comment, so an exclusion of casino-style products could arrive before the proposed rule that expands the definition.

What the interim exclusion on casino-style gambling would mean for markets

An exclusion for casino-style gambling would forbid federal swap treatment of products tied to pure-chance casino mechanics — for example, virtual slots or roulette-style outcomes — and would leave those products open to state regulation and prohibition. The CFTC does not yet publish the text, but the agency’s move follows a June 2026 proposal from Chairman Michael Selig’s commission that suggested contracts on games of pure chance would likely be contrary to the public interest.

Industry groups and platforms have already signalled where they stand. The Coalition for Prediction Markets, an industry association that represents Kalshi and Crypto.com among others, told regulators it would support a ban on markets tied to slot machines and roulette. That position aligns with a desire to concentrate prediction-market activity on event-based contracts that market participants say can convey information about real-world outcomes.

Market mechanics: where operators, platforms and states now stand

If event contracts are defined as swaps, federally regulated platforms will be able to point to exclusive CFTC jurisdiction when challenging state enforcement. That is the precise legal posture some platforms have used in litigation to resist state gambling regulators. The Sixth Circuit ruling undercuts that posture in its jurisdiction by finding Kalshi’s sports contracts functioned in practice as bets. A federal rule that places sports and other event contracts inside the swap definition would strengthen the platforms’ argument in future cases, although it will not end litigation given the reduced scope of deference after Loper Bright.

States are already taking action independently. Eight states, including California and New York, enforce statutory bans on dual-currency sweepstakes casinos. Those state statutes have driven a broader political conversation: keeping prediction markets away from slot-like and table-game mechanics could reduce the risk of a similar legislative backlash in other jurisdictions.

Stakeholder reactions and next steps

The American Gaming Association has argued prediction markets can provide gambling outside state and tribal regulatory frameworks. Opponents of the federal approach will point to the Sixth Circuit’s finding that Kalshi’s sports contracts operate as sports bets in practical terms. Supporters of a bifurcated federal lane argue sports and event markets can carry informational value that differs from pure-chance casino products.

Because the CFTC has not released the rule texts, the agency’s rationale for splitting event contracts and casino-style games is not publicly available. The interim final rule mechanism, however, allows the exclusion to take effect rapidly; the proposed rule to expand the swap definition will follow the usual notice-and-comment path unless the agency elects otherwise. Either way, the filings increase pressure on the Supreme Court to provide a final statutory interpretation should the circuit split persist.

What industry participants should monitor now

• The text of both filings when the CFTC publishes them, to see the precise definitions and any listed exceptions.

• Litigation developments in the Sixth, Ninth and Third Circuits, and any petitions to the Supreme Court.

• State enforcement actions in Ohio, Tennessee, California and New York.

The filings also have programmatic implications for platform compliance teams, market operators and vendors that service documentation, permissioning and legal workflows. If the CFTC finalises a definition that treats event contracts as swaps, platforms will adjust licensing and compliance strategies accordingly. For background on regulatory positioning for operators, see our analysis on regulation and market use cases in sports and b2b.

“The filings read together appear to draw a narrow federal lane,” industry commentary noted, describing a line that puts sports inside and casino-style products outside the swap definition. — Reporting based on CFTC submission dates and recent court rulings