Following two significant defeats in circuit court, the U.S. Commodity Futures Trading Commission (CFTC) has proposed changes that could reshape the regulatory framework surrounding event contracts. On Monday, the CFTC submitted drafts to the White House aimed at redefining what constitutes a "swap" for prediction market purposes. This definition broadly encompasses transactions that hinge on the occurrence of events with financial, economic, or commercial outcomes.
One proposal (RIN: 3038-AF82) seeks to expand the swap definition to encompass event contracts, while another proposal is under consideration regarding whether swaps must exclude gaming-related products. If these changes are approved, Designated Contract Markets (DCMs) would be barred from listing contracts on games like blackjack and craps. The CFTC submitted these proposals to the Office of Information and Regulatory Affairs, a move that might alleviate concerns among supporters of online casinos worried that prediction markets could disrupt their industry.
Recently, the U.S. Court of Appeals for the Sixth Circuit ruled in favor of Tennessee, which overturned a prior ruling. In 2025, Kalshi commenced offering event contracts in Tennessee, asserting that they qualified as swaps. The timeline for the next steps in the CFTC's proposal review process remains unclear.
At the Global Gaming Expo (G2E) in Las Vegas, state rights advocates once again rallied against prediction markets, marking a second consecutive year of unified opposition. The American Gaming Association (AGA), which has been at the forefront of opposing this growing asset class, claims that states have lost over $1 billion in tax revenue due to the rise of prediction markets. At this year's expo, the AGA allied with the Indian Gaming Association, which views these markets as a critical threat to the future of regulated gaming in the U.S.
During a panel discussion on the first day of the event, AGA President Bill Miller challenged the assertions made by prediction market operators that these contracts can act as effective hedging tools. Miller argued that a typical Tuesday baseball game does not serve any economic purpose and is merely a form of sports wagering. He was joined on stage by IGA Chair David Bean and Executive Director Jason Giles, and they noted the growing influence of prediction markets, particularly in states like California and Texas. Miller indicated that this battle may escalate to the Supreme Court, expressing optimism that states are gaining traction due to recent favorable lower court rulings. "The only way we lose is if we take our foot off their throat," he stated.
On the legislative front, the Protect College Sports Act, championed by Texas Senator Ted Cruz, passed the Senate on Monday with an overwhelming vote of 77-22. This act allows athletic associations to prohibit athletes from participating in college sports if they engage in sports betting or event contracts. Cruz emphasized the importance of maintaining integrity in both sports betting and college athletics. The bill is set to proceed to the House of Representatives.
In related news, Kalshi is reportedly seeking a new funding round of $1 billion, potentially valuing the company at approximately $40 billion, more than double its valuation from a year ago. Meanwhile, San Antonio Spurs center Victor Wembanyama weighed in on the recent trend of players endorsing prediction market and sportsbook operators. He expressed disapproval, stating, "Absolutely not, honestly, I think it’s very sad to see some players promote it," in reference to endorsements made by other athletes, including LeBron James and Giannis Antetokounmpo.
