September 28, 2026
Date the CFTC submitted the proposed rules to the White House 12
Two
Number of rules submitted to redefine swaps and exclude casino-style gambling 12
$823
Amount made by former Representative Adam Kinzinger in trades under CFTC investigation 3
$172,000
Fine levied against a former White House teleprompter operator over mention markets 3

Redefining Swaps to Assert Jurisdiction

On September 28, 2026, the Commodity Futures Trading Commission (CFTC) submitted two regulatory proposals to the White House's Office of Management and Budget (OMB) and the Office of Information and Regulatory Affairs (OIRA) 12. These proposals represent a direct effort by the federal regulator to solidify its authority over prediction markets and the event contracts traded on platforms like Kalshi, Polymarket, Crypto.com, and Robinhood 12. The first proposal, designated as RIN 3038-AF82, is a proposed rule that would expand the regulatory definition of swaps to explicitly encompass event contracts, which are binary yes-or-no wagers on measurable real-world outcomes 12. The second proposal, RIN 3038-AF81, is an interim final rule designed to exclude "casino-style gambling products" from the definition of a swap 12. While the full texts of these rules have not been made public, the CFTC has classified both submissions as not "economically significant" 12.

The regulatory classification of these contracts is the central point of contention in an ongoing jurisdictional battle between federal regulators and state authorities 12. If event contracts are legally recognized as swaps, they would fall under the exclusive regulatory purview of the CFTC, as argued by Chairman Mike Selig 12. This classification would effectively shield prediction market operators from state-level lawsuits that accuse them of running illegal gambling operations 12. Currently, Selig is operating unilaterally on these policy decisions because President Donald Trump has not nominated other commissioners to fill the remaining vacancies on the five-member panel 1.

The Judicial Divide and State Battles

The CFTC's rulemaking comes amid a fragmented legal landscape characterized by conflicting federal court rulings 12. Last week, the U.S. Sixth Circuit Court of Appeals ruled that sports-tied contracts on Kalshi do not qualify as swaps and are instead subject to state gambling laws, aligning with a prior decision by the Eighth Circuit Court of Appeals 1. However, the Third Circuit Court of Appeals reached the opposite conclusion, ruling that the CFTC holds proper jurisdiction over prediction markets 1. This division among federal appellate courts has led observers to suggest that the U.S. Supreme Court may ultimately need to resolve the jurisdictional split 12.

While federal courts debate the issue, state-level legal challenges against prediction platforms continue to mount 12. Last week, the state of New York filed a lawsuit against Polymarket in an attempt to ban the platform from operating within its borders, mirroring a previous legal action taken against Kalshi 2. The CFTC has actively participated in these disputes, frequently countersuing states to defend its claim of sole regulatory authority over the sector 12.

Insider Trading Investigations and Mention Markets

In tandem with its legislative efforts, the CFTC is actively policing trading activity on prediction platforms 23. The agency is currently investigating former Republican Representative Adam Kinzinger of Illinois regarding Kalshi trades he executed in December 2024 and January 2025 3. These trades focused on contracts predicting whether he would receive a presidential pardon from Joe Biden 3. Kinzinger, who was preemptively pardoned by Biden in January 2025 alongside other members of the House committee that investigated the January 6, 2021, Capitol attack, made a profit of $823 across approximately 25 trades 3. Kinzinger has denied any wrongdoing, asserting that he had been out of office for two years, possessed "no inside information," and never discussed the pardons with anyone 3.

This investigation is part of a broader crackdown on potential insider trading and market manipulation on prediction platforms 23. Kalshi itself has taken disciplinary actions, suspending three congressional candidates in April over bets placed on their own races, and banning former Representative George Santos in late August after referring his trading activity to the CFTC and the Department of Justice 3. Furthermore, the CFTC recently issued a fine of $172,000 to a former White House teleprompter operator who traded on presidential "mention markets" 3. The agency's staff issued an advisory warning that contracts settling on the specific words or conduct of a named individual are highly susceptible to manipulation and should be presumed problematic 23.

What is not yet established

  • The full text and specific details of the two submitted rules (RIN 3038-AF82 and RIN 3038-AF81)
  • The outcome of the CFTC's investigation into former Representative Adam Kinzinger
  • Whether the U.S. Supreme Court will agree to hear the jurisdictional dispute between the CFTC and state regulators
  • The specific details and scope of the crypto-focused prerule submitted by the CFTC to the White House

Frequently asked questions

What are the two rules the CFTC submitted to the White House?

The CFTC submitted a proposed rule (RIN 3038-AF82) to define event contracts as swaps and an interim final rule (RIN 3038-AF81) to exclude casino-style gambling products from the definition of a swap 2.

Why is the legal definition of a swap so important for prediction markets?

If event contracts are classified as swaps, they fall under the CFTC's exclusive federal jurisdiction, which would prevent states from regulating or banning them as illegal gambling 12.

What is the mention market advisory issued by the CFTC?

The CFTC issued an advisory warning that contracts settling on whether a named individual says specific words are highly susceptible to manipulation and should be presumed problematic 23.

Sources

  1. CoinDesk — U.S. CFTC seeks event contract definitions that may defy states' gambling claims (2026-09-30) https://www.coindesk.com/policy/2026/09/30/u-s-cftc-seeks-event-contract-definitions-that-may-defy-states-gambling-claims
  2. Decrypt — CFTC Sends White House New Rules to Cement Its Grip on Prediction Markets (2026-09-30) https://decrypt.co/379750/cftc-sends-white-house-new-rules-to-cement-its-grip-on-prediction-markets
  3. Decrypt — CFTC Investigating Adam Kinzinger Over Kalshi Bets on His Own Pardon: Report (2026-09-30) https://decrypt.co/379639/cftc-investigating-adam-kinzinger-over-kalshi-bets-on-his-own-pardon-report

This brief is for information and education. It is not financial advice or a recommendation to buy or sell.