CFTC Sends Two Prediction Market Rules for White House Review

The Commodity Futures Trading Commission submitted two prediction-market rulemaking items to the White House for review on September 28, proposing to include event contracts in the federal definition of swaps while excluding casino-style gambling products from that definition. The full texts have not been made public, leaving their precise scope and legal effect unclear. One item is a proposed rule that would explicitly include event contracts, such as yes-or-no contracts tied to real-world outcomes, in the swap definition. It is expected to proceed to public comment after review. The second is an interim final rule to exclude casino-style gambling products; that type of rule can take effect before a public comment process is complete. The filings do not establish when either item will be published or, in the second case, whether it will take effect. The swap classification is central to a dispute over whether prediction-market contracts are governed by federal derivatives law or state gambling laws. CFTC Chairman Michael Selig has argued that the agency has exclusive authority over prediction markets.