CFTC Sends Prediction Markets Rulemaking to the White House: What the OIRA Submission Means for Event Contracts
De Silva Law Offices, LLC
On Tuesday, the Commodity Futures Trading Commission transmitted its notice of proposed rulemaking on event contracts to the Office of Information and Regulatory Affairs for interagency review. OIRA, part of the White House Office of Management and Budget, reviews significant federal regulations before they are published for public comment. The submission is a procedural step, but a consequential one. It means the CFTC has drafted actual proposed rules for prediction markets and believes them ready for White House scrutiny.
This matters more than the headline suggests. To understand why, you have to look at what else happened this week and what has been building for months.
The ANPRM Set the Table
In March, the CFTC issued an advanced notice of proposed rulemaking seeking public feedback on how to regulate event contracts. An ANPRM is not a rule. It is a request for information, a way for the agency to signal its intentions and gather data before committing to a specific regulatory framework. The March ANPRM asked for comment on several key topics: whether margin trading should be permitted, what kinds of contracts should be prohibited as contrary to the public interest, and how to address insider knowledge in prediction markets. Alongside the ANPRM, the CFTC issued staff guidance encouraging designated contract markets to evaluate whether any of their event contracts might be susceptible to manipulation, which is prohibited under the Commodity Exchange Act. The guidance flagged specific categories of concern, including sports contracts tied to individual player injuries, unsportsmanlike conduct, or officiating decisions.
De Silva Law Offices submitted a comment letter to the CFTC during the ANPRM comment period, addressing several of these issues from the perspective of practitioners and market participants operating in the event contracts space.
The jump from ANPRM to a proposed rule submitted to OIRA is faster than most observers expected.
The NPRM Arrives in Context
The OIRA submission does not exist in a vacuum. It arrives against the backdrop of a coordinated federal strategy to assert and defend CFTC jurisdiction over prediction markets on multiple fronts simultaneously.
On the litigation front, the CFTC has filed suit against multiple states that it claims are improperly enforcing state gambling laws against federally regulated prediction market platforms. The targets include Arizona, Connecticut, Illinois, and Minnesota. In each case, the CFTC argues that the Commodity Exchange Act gives it exclusive jurisdiction over event contracts traded on registered designated contract markets, and that state gambling laws are preempted when they seek to regulate or ban those contracts.
Federal courts have split on the question. The Third Circuit, in a 2-1 decision in April, upheld a preliminary injunction blocking New Jersey from enforcing its gambling laws against Kalshi’s sports event contracts. The majority held that those contracts likely qualify as swaps under the CEA and that federal law preempts state regulation of swaps traded on CFTC-licensed exchanges. The Ninth Circuit heard consolidated oral arguments on April 16 in cases involving Kalshi, Robinhood, and Crypto.com challenging the Nevada Gaming Control Board, but has not yet issued a decision. The district court below ruled against all three platforms, finding that sports event contracts are not swaps. If the Ninth Circuit affirms, a circuit split exists and the Supreme Court’s hand is effectively forced.
New Jersey has already signaled its intent to seek Supreme Court review of the Third Circuit decision. Connecticut tribes have sought to intervene in the CFTC’s preemption litigation there. And the Prediction Markets Are Gambling Act, introduced in the Senate in March by Senators Curtis and Schiff, would amend the CEA to reclassify sports and casino-style event contracts as gambling outside CFTC jurisdiction entirely. The legislative track and the judicial track are converging.
This is the environment into which the CFTC has now submitted its proposed rules.
The Presidential Endorsement
On the same day the CFTC transmitted its NPRM to OIRA, President Trump posted on Truth Social backing the agency and its chairman. The post described CFTC Chairman Michael Selig’s work in cultivating the prediction market industry favorably and stated that the federal government is setting rules for event contracts that will serve as a “gold standard” for states. The President called it critically important that the CFTC’s exclusive authority over prediction markets be maintained. He also criticized by name New York Attorney General Letitia James and Illinois Governor JB Pritzker, both of whom have sought to enforce state-level restrictions on prediction market platforms.
A sitting president publicly endorsing a specific agency’s jurisdictional claims, naming and criticizing state officials who disagree, and characterizing pending federal rules as a preemptive standard for the states is not ordinary regulatory commentary. It signals that the White House views the NPRM not only as a regulatory framework but as a vehicle for resolving the preemption question in the CFTC’s favor, regardless of what the courts do.
What Practitioners and Platforms Should Watch
The OIRA review process is not public. The substance of the proposed rule will not be available until the review is complete and the CFTC publishes it in the Federal Register for notice and comment. But the fact that the agency has moved from information gathering to a formal proposed rule in roughly three months tells us that the CFTC is not waiting for the courts or Congress to settle the jurisdictional fight. It is building the regulatory infrastructure that would make the CFTC’s claim to exclusive jurisdiction harder to unwind.
For prediction market platforms, introducing brokers, and compliance professionals, the practical question is what the proposed rule will say about several issues the ANPRM flagged. How will the CFTC define which event contracts are permissible and which are contrary to the public interest? What will the margin and capital requirements look like for platforms offering event contracts to retail participants? And how will the agency address the growing evidence of information asymmetry between professional and retail traders on these platforms?
Those details will matter enormously for how this industry operates going forward. What we know today is that the CFTC has committed to writing the rules, the White House is reviewing them, and the President has publicly endorsed the outcome. The litigation, the legislation, and the rulemaking are no longer separate tracks. They are a single coordinated effort to establish federal primacy over prediction markets before the Supreme Court or Congress forces a resolution on terms the executive branch cannot control.
This article is part of De Silva Law Offices’ ongoing event contracts series. For questions about event contract compliance, CFTC regulatory matters, or prediction market law, contact us at 312-500-8424 or info@desilvalawoffices.com.