The Commodity Futures Trading Commission (CFTC) has proposed significant regulatory changes regarding event contracts, following recent legal challenges. On Monday, the CFTC submitted proposals to the White House aimed at redefining the term "swap" to include event contracts utilized in prediction markets. Under current regulations, a swap is defined as a transaction contingent on an event that has financial, economic, or commercial implications.
The first proposal (RIN: 3038-AF82) seeks to expand the definition of a swap, while a separate initiative is under review regarding whether gaming-related products should be excluded from this classification. If these proposals are approved, Designated Contract Markets (DCMs) would be barred from offering contracts on gaming activities like blackjack and craps. This move may help pacify advocates concerned that prediction markets might overshadow traditional gaming products.
This follows a recent ruling by the U.S. Court of Appeals for the Sixth Circuit, which sided with Tennessee, overturning a previous lower court ruling. The ruling impacts Kalshi, a company that began offering event contracts in Tennessee in 2025, asserting these fell under the swap classification. The timeline for further proceedings is currently unclear.
At the Global Gaming Expo in Las Vegas, continued opposition to prediction markets was evident as a coalition of states rights advocates expressed their concerns. The American Gaming Association (AGA), which has led the fight against this emerging asset class, claims states have forfeited over $1 billion in tax revenue due to the rise of prediction markets. The AGA teamed up with the Indian Gaming Association, both deeming prediction markets a threat to the integrity of the regulated gaming industry in the U.S. During the opening panel, AGA President Bill Miller rebuffed claims from prediction operators that such contracts offer valid hedging opportunities, dismissing a routine baseball game as economically significant and labeling it as mere sports wagering.
Miller expressed that the legal battle may escalate to the Supreme Court, feeling optimistic about recent lower court victories providing momentum to their cause. He commented, "The only way we lose is if we take our foot off their throat."
Concurrently, a notable legislative measure, the Protect College Sports Act, passed the U.S. Senate with a 77-22 vote on Monday. Sponsored by Texas Senator Ted Cruz, the act aims to establish uniform regulations in college athletics, enabling conferences and athletic associations to prohibit players from college sports if they engage in sports betting or event contracts. Cruz emphasized the importance of maintaining integrity in both collegiate sports and sports betting markets. The bill is now headed for consideration in the House of Representatives.
In business developments, reports have emerged that Kalshi is pursuing a new funding round of $1 billion, which could elevate its valuation to approximately $40 billion—more than doubling within the past year.
In a related discussion, San Antonio Spurs center Victor Wembanyama commented on player endorsements for prediction markets and sportsbooks, referring to recent high-profile deals involving athletes like LeBron James and Giannis Antetokounmpo. Wembanyama remarked, “Absolutely not, honestly, I think it’s very sad to see some players promote it.”
