US Regulator CFTC Files New Prediction Market Rules for White House Review

The U.S. Commodity Futures Trading Commission (CFTC) has taken a significant step toward clarifying the legal gray area surrounding prediction markets. On September 28, two new rulemakings were sent to the Office of Information and Regulatory Affairs at the White House for review. The regulator's goal is to further define the expanding sector of event contracts while strictly excluding casino-style products from the definition of financial swaps. This regulatory offensive comes at a time when platforms like Kalshi and Polymarket are gaining massive media reach and are increasingly perceived as serious sources of information for political developments.

The urgency of these measures is highlighted by the current cooperation between CBS News and Kalshi. Starting September 30, 2026, the news network began incorporating data from prediction markets into its coverage of the midterm elections. Anthony Salvanto, CBS elections director, emphasized that this data is intended to supplement, rather than replace, independent polling. Nevertheless, this partnership, similar to Kalshi's existing deals with CNN and CNBC, marks a turning point. Prediction markets are evolving from a niche for crypto enthusiasts into a component of mainstream journalism, forcing regulators to create clear guidelines for consumer protection and market integrity.

Numbers and facts

A central aspect of the new rules is the distinction between economically justified swaps and pure gambling. Rule RIN 3038-AF81 is intended to explicitly exclude casino-style gambling products from the definition of a swap. In a proposal from June, the CFTC specified that this could include roulette, as well as games of skill such as poker and chess. In parallel, the rulemaking RIN 3038-AF82 aims to further define swaps to include certain event contracts. The volatility of this distinction is illustrated by current investigations into insider trading. The CFTC is currently investigating former Rep. Adam Kinzinger, who reportedly wagered $669 on markets related to his own pardon by President Joe Biden, netting $823.

The market is also in motion technologically and financially. Novig is currently discussing a funding round that could value the company at up to $2 billion. This would be a fourfold increase from the $500 million valuation in February. Meanwhile, Polymarket is upgrading its user protections. Users can now voluntarily self-exclude for periods ranging from 30 days to permanently. U.S. customers also have the option to set daily, weekly, or monthly deposit limits. These measures are a direct response to criticism that prediction markets often operate without sufficient safeguard systems.

Background

The legal dispute over jurisdiction is complex. While the Third Circuit in New Jersey sided with Kalshi, the Sixth and Ninth circuits rejected similar arguments in Nevada, Ohio, and Tennessee. At its core, the issue is whether sports contracts qualify as swaps under the CFTC's exclusive jurisdiction or should be classified as Class III gaming under the Indian Gaming Regulatory Act (IGRA). These inconsistencies could ultimately end up before the U.S. Supreme Court, as major players like Robinhood and Crypto.com seek review of the rulings.

"We’re partnering with CBS News to bring prediction market data to their midterm elections coverage." - Kalshi, Official statement on X

The Department of Justice (DOJ) maintains a rather narrow view. In a case against soldier Gannon Ken Van Dyke, prosecutors argued on September 30 that contracts related to political events, such as those in Venezuela, are inherently economic and should therefore qualify as swaps. They serve to hedge financial risks and thus differ fundamentally from pure sports betting. This nuanced perspective shows that U.S. authorities are trying to protect the financial market from being flooded with gambling products without banning useful hedging instruments.

Why it matters for German players

For German players who rely on the market regulated by the State Treaty on Gambling 2021 (GlüStV 2021), these U.S. developments are an important signal. In Germany, the separation between financial products and gambling is more clearly defined by the GGL and BaFin than in the U.S. Event bets on political outcomes are virtually impossible for private providers to implement legally in Germany, as they do not belong to the catalog of permitted sports bets. German customers should ensure they only play with providers listed on the official GGL whitelist. Only there do protective mechanisms apply, such as the mandatory monthly deposit limit of 1,000 euros via the LUGAS system and the stake limit of 1 euro per spin for virtual slots.

Anyone active on unregulated platforms from Curacao or via MGA licenses without a German permit not only faces legal risks but also waives the strict player protection guidelines applicable in Germany. Developments at Polymarket show that international platforms are introducing voluntary limits, but these do not reach the security level of the German central lock file system (OASIS).

What it means for GGL-licensed casinos

For operators with a German license, the U.S. rules represent a confirmation of their business model. The clear demarcation of casino products from financial bets, which the CFTC is now striving for, is already a reality in Germany. GGL-licensed casinos benefit from legal certainty but must compete with international prediction markets that are often disguised as modern financial products. The trend toward integrating market data into major media houses could, in the long term, also increase pressure in Europe to examine new forms of betting. However, as long as player protection and manipulation prevention remain top priorities, the German regulatory framework with its hard limits remains a bulwark against the excesses of the unregulated betting market.