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The Commodity Futures Trading Commission (CFTC) is proposing more explicit rules for event contracts, including sports prediction markets. The agency’s Oct. 9 actions also formalize its position that qualifying casino and sportsbook bets belong outside federal derivatives regulation.
New Jersey is seeking Supreme Court review of a ruling that prevents its regulators from enforcing gambling laws against Kalshi’s sports contracts.
Neither measure resolves the state’s challenge to Kalshi.
Federal measures distinguish event trading from gambling wagers
The proposed amendment would identify sports, political, cultural, and weather event contracts as swaps. These financial contracts base payments on specified outcomes, such as a game result or an election winner.
Chairman Michael S. Selig said the Commodity Exchange Act gives his agency sole regulatory authority over event contracts.
The CFTC says regulated event-contract exchanges collect trading fees without profiting from whether a customer’s prediction wins or loses. Contract prices come from orders placed by buyers and sellers, a structure the CFTC cites in distinguishing these products from conventional wagers.
Ordinary casino games and sportsbook wagers receive different treatment under the accompanying interim final rule. The CFTC is putting its longstanding exclusion of casino-style gambling into its regulations, covering qualifying sports bets, slots, and table games.
The gambling exclusion requires an operator to act within its state or tribal authorization, with the wager regulated under the relevant gambling laws. It does not cover transactions conducted on exchanges or other markets where trades are negotiated or executed among multiple participants.
The CFTC is seeking public comments on the event-contract proposal, which has not yet been finalized. The gambling exclusion takes effect when published in the Federal Register.
New Jersey seeks Supreme Court review of Kalshi ruling
Kalshi has been able to continue offering sports contracts in New Jersey because of a preliminary injunction. The Third Circuit upheld that protection on April 6, finding that the company had a reasonable chance of proving federal law overrides the state restrictions.
The court left temporary protection in place, without issuing a final judgment on the lawsuit.
New Jersey filed its Supreme Court petition Sept. 2, asking whether federal commodities law prevents states from regulating sports bets offered on CFTC-registered markets. Kalshi’s response is due Nov. 9, according to the court docket.
The justices have not agreed to hear the case. Filing the petition does not cancel the injunction or require Kalshi to withdraw its New Jersey sports offerings.
The state’s request has also drawn support from gaming lawmakers. The National Council of Legislators from Gaming States argues that federal regulation of an exchange should not eliminate states’ power to apply their gambling rules.
New Jersey looks to preserve betting limits and player protections
New Jersey sportsbooks and Atlantic City casinos must still meet the state’s licensing and gambling requirements.
New Jersey’s Supreme Court petition identifies safeguards the state wants to preserve, including a minimum sports betting age of 21, voluntary self-exclusion, and restrictions on betting by people with inside information.
Licensed sportsbooks also cannot accept wagers on college sporting events held in New Jersey or involving a New Jersey college team, regardless of the venue. That includes Rutgers games even when the team plays outside the state.
A prediction market account does not automatically follow the same rules as a New Jersey sportsbook account. Customers should review the platform’s eligibility requirements, exclusion policies and procedures for resolving disputes before putting money into a contract.
