The US Commodity Futures Trading Commission has sent two regulatory measures to the White House that could reshape how prediction markets are treated under federal law, as the industry faces growing pressure from state governments, gaming groups and tribal organisations.
The White House Office of Information and Regulatory Affairs received both CFTC submissions on 28 September. One proposal, RIN 3038-AF82, would formally expand the definition of a “swap” to include event contracts. A second measure, RIN 3038-AF81, would exclude casino-style gambling products from the swap definition. Both remain under review and neither has a legal deadline.
The distinction could have major consequences for prediction-market operators. Classifying event contracts as swaps would strengthen the argument that products offered through federally regulated derivatives markets fall under CFTC oversight, while excluding casino-style gambling products would draw a clearer regulatory boundary between prediction markets and traditional online casino games.
The full text of the measures has not yet been published. The event-contract measure is listed as a proposed rule, while the casino exclusion is classified as an interim final rule. Both are described by OIRA as not economically significant.
The regulatory push follows a series of court disputes over whether federal commodities law prevents states from applying their own gambling laws to sports event contracts. Most recently, the Sixth Circuit ruled against Kalshi in litigation involving Tennessee, adding to the legal uncertainty surrounding the sector.
Gaming industry increases pressure at G2E
Opposition to prediction markets was also a prominent theme at the Global Gaming Expo in Las Vegas, where the American Gaming Association and Indian Gaming Association again pushed for stronger state and tribal authority over sports-related contracts.
The AGA estimates that the growth of prediction markets has cost US states more than $1 billion in potential sports betting tax revenue. Industry representatives argue that contracts linked to ordinary sporting events function in practice like sports wagers and should therefore face comparable licensing, taxation and consumer-protection requirements.
Tribal gaming representatives have also warned that federally regulated prediction markets could undermine established tribal gaming rights, particularly in states such as California where tribes play a central role in the regulated gambling framework.
The debate is becoming increasingly important as prediction-market platforms expand their sports offerings in major states where conventional online sports betting remains unavailable, including California and Texas.
Senate backs college sports restrictions
The regulatory debate has also reached college athletics.
The US Senate approved the Protect College Sports Act by a 77-22 vote on 28 September, sending the legislation to the House of Representatives. The bipartisan bill is intended to create national standards covering issues including name, image and likeness payments, athlete eligibility, revenue sharing and transfers.
The legislation would also allow conferences and athletic organisations to restrict athletes from participating in college sports if they engage in prohibited sports betting or sports event-contract activity.
The bill has been strongly promoted by Texas Senator Ted Cruz, who has argued that a consistent national framework is required as financial activity surrounding college athletics continues to grow.
Kalshi targets $40bn valuation
Kalshi’s rapid expansion is continuing despite the regulatory and legal pressure.
The company is in advanced discussions to raise approximately $1 billion in new funding at a valuation of around $40 billion, according to Reuters. The proposed valuation would represent another major increase following a previous funding round that valued the prediction-market operator at about $22 billion earlier in 2026.
Existing and potential investors involved in the discussions reportedly include Sequoia Capital, Wellington Management, Tiger Global Management and Dragoneer Investment Group.
The fundraising talks underline the scale of investor interest in prediction markets even as courts and regulators continue to debate where sports event contracts sit between derivatives trading and gambling.
Meanwhile, San Antonio Spurs star Victor Wembanyama has publicly rejected the prospect of promoting either sportsbooks or prediction-market businesses. His position contrasts with a growing number of high-profile athletes who have entered commercial partnerships with companies operating in the sector.
With federal rulemaking, state litigation, major investment rounds and political scrutiny developing simultaneously, the fight over the legal status of prediction markets is moving into an increasingly decisive phase.