After facing two significant defeats in the circuit courts, the Commodity Futures Trading Commission (CFTC) has taken action by sending two proposals to the White House that may reshape the long-term regulatory landscape for event contracts.
On Monday, the CFTC submitted drafts seeking a review to modify the definition of a "swap" specifically for prediction market purposes. Currently, a swap is understood as a transaction contingent upon an event with a financial, economic, or commercial consequence.
One of the proposals (RIN: 3038-AF82) aims to expand the definition of a swap to encompass event contracts. Another proposal is under review regarding the exclusion of gaming-style products from swap definitions.
Should these proposals be approved, the rule would prevent Designated Contract Markets (DCMs) from offering contracts on online gaming products like blackjack and craps. This move might alleviate concerns among iCasino proponents worried that prediction markets could potentially undermine these products in the future.
Recently, the US Court of Appeals for the Sixth Circuit sided with Tennessee, reversing an earlier lower court ruling. In 2025, Kalshi initiated its event contracts in Tennessee, claiming compliance with the swap standards. The timeline for subsequent steps in this regulatory process has yet to be clarified.
At the Global Gaming Expo in Las Vegas, a coalition of state rights advocates reiterated their opposition to prediction markets for the second consecutive year. The American Gaming Association (AGA), a key player in this opposition, estimates that states have forfeited over $1 billion in tax revenues due to the rise of prediction markets.
During the expo, the AGA allied with the Indian Gaming Association, both viewing prediction markets as a substantial threat to the future of regulated gaming in the U.S. On the expo’s opening day, AGA President Bill Miller challenged the narrative presented by prediction market operators, arguing that events like a regular Tuesday night baseball game do not possess economic significance but are mere sports wagering.
Joining Miller were IGA Chair David Bean and Executive Director Jason Giles. Prediction markets have been particularly popular in California and Texas, with James Siva, chair of the California Nations Indian Gaming Association, asserting that tribes remain the sole operators in their state.
Miller expressed his belief that the conflict may escalate to the Supreme Court, pointing to recent lower court victories as momentum for the states.
"The only way we lose is if we take our foot off their throat," Miller stated.
Meanwhile, significant developments unfolded in the U.S. Senate, where the Protect College Sports Act, introduced by Texas Senator Ted Cruz, was overwhelmingly passed with a vote of 77-22. This legislation empowers conferences and athletic associations to bar players from participating in college sports if they engage in sports betting or enter into sports event contracts. Cruz emphasized the importance of maintaining integrity in both these markets.
The bill is now set to progress to the House of Representatives.
In another notable development, Kalshi has reportedly initiated a new funding round aiming for $1 billion, potentially valuing the company at around $40 billion, more than doubling its valuation over the past year.
Additionally, San Antonio Spurs center Victor Wembanyama voiced his opinion on player endorsements relating to prediction markets and sportsbook operators. Recently, both LeBron James and Giannis Antetokounmpo have received lucrative deals with prediction market firms. When asked about his own potential endorsements, Wembanyama responded, “Absolutely not, honestly, I think it’s very sad to see some players promote it.”
