The U.S. Commodity Futures Trading Commission (CFTC) is proposing changes that could significantly impact the regulation of event contracts, following two recent losses in court. On Monday, the CFTC submitted drafts to the White House seeking to redefine what qualifies as a "swap" in the context of prediction markets. A swap, by current standards, is a transaction reliant on the outcome of events that have financial, economic, or commercial implications.
One of the proposals (RIN: 3038-AF82) aims to expand the definition of a swap to explicitly include event contracts. Another proposal is under consideration regarding the exclusion of gaming-style products from swaps. If these rules are approved, Designated Contract Markets (DCMs) would be prohibited from offering contracts based on online gaming games like blackjack and craps. This could potentially reassure advocates of iCasino products who fear that the rise of prediction markets might jeopardize their business in the future.
Last week, the Sixth Circuit Court of Appeals sided with Tennessee, reversing a lower court ruling. Kalshi began offering event contracts in Tennessee in 2025, arguing that these products met the definition of swaps. The timeline for the next steps in this regulatory process remains uncertain.
At the Global Gaming Expo (G2E) in Las Vegas, opposition to prediction markets has solidified, with multiple states uniting against this emerging asset class. The American Gaming Association (AGA), which has been vocal in its opposition, claims states have lost over $1 billion in tax revenue due to the growth of prediction markets. This year, the AGA partnered with the Indian Gaming Association, expressing that prediction markets pose a significant threat to the U.S. regulated gaming environment.
During a panel discussion, AGA President Bill Miller criticized assertions from prediction operators that these contracts function as legitimate hedging tools. According to Miller, a routine Tuesday night baseball game does not fulfill an economic purpose; it is merely a form of sports betting. He was accompanied on the panel by IGA Chair David Bean and Executive Director Jason Giles. Prediction markets have notably gained traction in states such as California and Texas, with California Nations Indian Gaming Association Chair James Siva noting that tribes remain the only operators in that state.
Miller suggested that this issue is likely to escalate to the Supreme Court, arguing that states have gained strength following recent court victories. "The only way we lose is if we take our foot off their throat," he stated.
As the gaming sector gathered in Las Vegas, the U.S. Senate passed a significant bill introduced by Senator Ted Cruz. The Protect College Sports Act, which establishes uniform standards for college athletics, passed with a significant margin of 77-22. The bill empowers conferences and athletic associations to prevent players from participating in college sports if they engage in sports betting or sports event contracts. Cruz emphasized the critical importance of maintaining integrity across both markets. The legislation now moves to the House of Representatives for further consideration.
Furthermore, reports have emerged that Kalshi is pursuing a new funding round expected to raise $1 billion, potentially valuing the company around $40 billion, a figure that has more than doubled in the past year.
In a related development, NBA player Victor Wembanyama spoke out against player endorsements for prediction markets and sportsbooks. He expressed his disapproval, stating, "Absolutely not, honestly, I think it’s very sad to see some players promote it." His comments follow major endorsement deals for players like LeBron James and Giannis Antetokounmpo with prediction market operators.
