The CFTC has not finalized a rule classifying all event contracts as swaps. In March 2026, it asked how those contracts might fit the Commodity Exchange Act’s existing swap definition and what existing swap requirements might apply. That inquiry is separate from a June proposal about when certain event contracts may be contrary to the public interest. Meanwhile, the dispute over whether sports-related contracts are federally regulated derivatives or state-regulated gambling has reached courts and the Supreme Court’s doorstep.
What happened, and what has not happened
On October 8, the Associated Press reported that the NFL filed a brief supporting New Jersey’s request for the U.S. Supreme Court to review its dispute with Kalshi. The league argued that states are better positioned to oversee sports-related contracts. The filing adds weight to a growing fight over who regulates prediction markets, but it does not settle that question.
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The CFTC action behind the headline is a March 2026 advance notice of proposed rulemaking, or ANPR. It asks for information about whether event contracts may fit the Commodity Exchange Act’s definition of a “swap” and how swap rules might apply. An advance notice solicits views to inform possible future agency action; it is not a final classification or a comprehensive rule covering every event contract.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsThe March notice also recognizes that legal treatment may depend on the contract and the relevant facts: an event contract could fall within the CEA’s swap definition or be a futures contract. The underlying question is whether the arrangement comes within federal derivatives law—not whether the CFTC has already declared every prediction-market product to be a swap.
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What the CFTC means by an event contract
The CFTC describes event contracts as “derivative contracts, typically with a binary payoff structure, based on the outcome of an underlying occurrence or event.” A binary payoff generally turns on whether a specified outcome occurs. In the March notice, the agency uses “prediction market” for a CFTC-registered designated contract market (DCM) or swap execution facility (SEF) that offers event contracts.
The CEA’s swap definition includes certain payments dependent on an event or contingency associated with a potential financial, economic, or commercial consequence. The March notice asks what features of prediction markets support or cut against applying that definition, and how existing requirements should work if contracts are treated as swaps.
The CFTC says a prediction market offering swaps or futures to the public must register as a DCM. That is a federal regulatory framework for registered markets; it does not by itself resolve the separate dispute over whether a particular sports contract is a derivative, a gambling wager, or both in the eyes of competing regulators.
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Two CFTC proceedings with different jobs
| Proceeding | What it addresses | Status and significance |
|---|---|---|
| March 2026 advance notice on event contracts and swaps | Whether event contracts may fall within the CEA swap definition and how swap requirements might apply. The CFTC’s notice also discusses the possible futures-contract classification. | A request for information to inform possible future action; it does not itself establish a final classification or new comprehensive rules. Source: CFTC advance notice, 2026-05105. |
| June 2026 proposed rule, “Prediction Markets; Public Interest Determinations” | How the Commission might determine that contracts involving certain enumerated activities are contrary to the public interest and therefore cannot be listed or cleared through a registered entity. | A separate Part 40 proposal, not a final rule. The Federal Register notice set July 27, 2026, as the comment deadline. Source: Federal Register, 91 FR 35806. |
The June proposal concerns the CEA’s special treatment of event contracts involving unlawful activity, terrorism, assassination, war, gaming, or similar activity identified by the Commission. It proposes factors and procedures for public-interest determinations, a definition of “gaming,” and clarification of when a contract “involves” an underlying activity. Those provisions are proposed, not established requirements in force on the basis of the cited notice.
Sports-contract distinctions have also drawn attention. Axios’s October 8 summary described the June proposal as distinguishing broad sports outcomes, such as a final score or season performance, from contracts tied to a specific play. That is a news summary of the proposal, not a substitute for its operative text; the proposal itself is the relevant source for the exact scope of any proposed test.
Why the market’s growth matters
The CFTC’s own figures show how quickly event-contract listings expanded. The Commission reported an average of about five event contracts a year on DCMs from 2006 through 2020, 131 in 2021, and approximately 1,600 certified in 2025. These figures describe contracts listed or certified, not necessarily the number of distinct markets actively trading at any given moment.
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The CFTC also reported more than $25 billion in total trading volume across CFTC-registered prediction markets in 2025. That figure is a reported aggregate for those markets; it should not be conflated with the number of contracts or treated as volume for sports contracts alone.
Why federal and state authorities disagree
The CFTC’s position is that event contracts traded on registered DCMs fall within its exclusive federal regulatory authority. In an April 2, 2026, announcement of lawsuits against Arizona, Connecticut, and Illinois, the agency said those states had tried to outlaw, regulate, or otherwise restrain DCM activity. Chairman Michael S. Selig stated: “The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators.” That is the Commission’s litigation position, not a final nationwide judicial ruling.
States and other critics dispute how far federal authority reaches, particularly for sports-related contracts. Their argument is that some products are gambling wagers subject to state law, rather than derivatives governed exclusively by the CFTC. A central point of disagreement is whether a sports outcome meets the statutory requirement for a potential financial, economic, or commercial consequence, and how the contract’s design affects that analysis.
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The competing positions can be understood across three questions:
- What is the product? The CFTC says an event contract may qualify as a swap or futures contract; opponents argue that at least some sports contracts are gambling products.
- Who regulates it? The Commission asserts federal authority over contracts on registered markets. State regulators and other opponents claim state gambling laws apply to at least some sports-related offerings.
- What does the contract cover? Broad outcomes and contracts tied to individual plays may raise different public-interest and integrity concerns. The June proposal addresses this through a separate proposed process, not through the March swap-definition inquiry.
What the court cases have decided so far
The state-federal conflict is playing out in litigation, and one interim ruling does not resolve the cases nationwide. On April 10, the Associated Press reported that a federal judge temporarily barred Arizona from enforcing its gambling laws against prediction-market operators. The judge found that the CFTC had shown a reasonable chance of success on its preemption theory. Temporary relief and a preliminary assessment are not a final ruling on the merits or a binding answer for every state.
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In its October 8 report on the NFL filing, the Associated Press said the league’s brief cited $3.3 billion in prediction-market trading volume on the first Sunday of the 2026 NFL season, of which $1.8 billion was connected to the NFL. Those numbers are claims attributed to the NFL’s brief, not an independently established CFTC data series. Lawyers for the league argued: “Absent the clarity that only this Court can provide, (prediction market) operators will continue exploiting the gap between state and federal regulation, endangering consumers and the integrity of sports events across the country.” That quotation expresses the NFL’s argument, not a court’s finding.
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The October 8 AP report establishes that the NFL supported New Jersey’s petition for Supreme Court review; it does not report that the Court agreed to hear the case. Whether the Court grants review is distinct from the parties’ arguments and from lower-court interim orders.
The March swap inquiry and June public-interest proposal may also proceed on separate tracks from the litigation. The comment deadline for the June proposal was July 27, 2026, but the cited Federal Register notice alone does not establish what the Commission did after comments closed or whether it later adopted a final rule. Until those legal and agency processes produce further decisions, describing all prediction-market contracts as either swaps or illegal sports bets overstates what has been established.
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