Two Appeals Courts Just Said Kalshi Sports Bets Are Gambling. The CFTC, Run by One Man, Is Rewriting the Dictionary So They Aren't.

Three federal appeals courts have now ruled on whether a Kalshi bet on a football game is a financial derivative or a gambling product.

The score is 2-1 for gambling.

The Commodity Futures Trading Commission’s answer is to change the definition. On Monday, September 28, the agency sent two rules to the White House that would write event contracts directly into the legal meaning of the word “swap.” Swaps are CFTC territory. Gambling belongs to the states. Settle the definition and you settle who’s in charge.

The CFTC currently has one commissioner: Chairman Mike Selig. President Trump hasn’t nominated anyone else.

What Got Filed

Both rules went to the Office of Information and Regulatory Affairs (OIRA), the White House office that reviews federal rules before the public sees them. Going by the Reginfo listings and reporting from CoinDesk, Decrypt and Crypto Briefing:

• RIN 3038-AF82, a proposed rule. It would “further define” the term swap to explicitly include event contracts, meaning the yes-or-no products sold by Kalshi, Polymarket, Crypto.com and Robinhood. It goes out for public comment once OIRA clears it.
• RIN 3038-AF81, an interim final rule. It would exclude “casino-style gambling products” from the swap definition. Interim final rules are unusual because they can take effect while comments are still being collected, without waiting for the full notice-and-comment process.

The text of both is confidential until the White House review is done. What’s visible is the shape of the deal: event contracts count as derivatives, slot-machine-style products don’t, and the CFTC decides which is which.

This is a separate filing from the crypto market structure rulebook the CFTC sent to OIRA on September 17, two days after the Senate killed CLARITY. Two weeks, three major rulemakings, one commissioner.

The Courts Already Started Without Them

This fight has been running through the federal courts all year, and the CFTC has been losing it.

• Third Circuit (April 2026): Sided with Kalshi against New Jersey, holding that sports contracts fit the swap definition and federal law preempts state gambling rules.
• Ninth Circuit (August 28): Went the other way. Kalshi’s contracts are subject to Nevada gambling law.
• Sixth Circuit (September 25): A unanimous three-judge panel led by Judge Julia Smith Gibbons ruled that Ohio and Tennessee can regulate event contracts under their gambling statutes.

That’s a clean circuit split, and the Supreme Court already has three petitions on its desk: New Jersey’s (filed September 2) appealing its Third Circuit loss, plus Robinhood Derivatives (September 10) and Crypto.com’s North American Derivatives Exchange (September 11) appealing the Ninth Circuit. At least 20 states have active litigation or enforcement against prediction markets, including New York, where Governor Kathy Hochul accused Polymarket of “running an unlicensed gambling operation.”

The CFTC hasn’t just been watching. It has countersued states to block them from policing these platforms, arguing its authority is exclusive.

Why a Definition Matters So Much

Every one of those court cases turns on the same question: is a sports event contract a “swap” under the Commodity Exchange Act? The Ninth Circuit said no and leaned on the major-questions doctrine, the idea that an agency can’t claim a power this big without Congress saying so clearly.

A formal CFTC rule saying event contracts are swaps doesn’t automatically overturn those rulings. Courts aren’t bound to defer to agency interpretations the way they once were. But it hands Kalshi, Polymarket and the brokers a fresh federal regulation to cite in every courtroom, and it gives the Supreme Court an agency position written down in the Federal Register rather than in a legal brief. One analyst quoted by CoinDesk said defining event contracts as non-gambling swaps could “undermine the states’ position.”

The “casino-style” carve-out is the concession that makes it sellable. It lets the CFTC say it isn’t licensing online slots, just financial contracts that happen to be about the Super Bowl.

The catch is the same one hanging over the crypto rulebook. Rules made by a one-member commission can be rewritten by the next commission. The Senate just showed it can’t pass a crypto market structure bill. A swap definition that four future commissioners dislike can be undone a lot more easily than a statute.

Why This Matters for Crypto Jobs

Prediction markets are one of the fastest-growing businesses crypto-adjacent companies are building, and this is the regulatory fight that decides how big they get.

• If the CFTC wins, it’s one national market. Kalshi, Polymarket, Robinhood and Crypto.com get to sell the same contracts in all 50 states under one regulator. That means hiring for product, market making, surveillance and trading infra at national scale.
• If the states win, it’s a 50-state licensing slog. That looks like online sports betting: state-by-state gaming licenses, geofencing, and compliance teams that look more like a casino operator’s than an exchange’s. Still jobs, just different ones.
• Surveillance and market integrity are the safe bet either way. The CFTC’s Division of Market Oversight issued a September 22 advisory warning about manipulation risk in “mention markets,” contracts that settle on whether someone says a particular word. Whoever wins jurisdiction, that’s the next enforcement theme, and platforms need people who can detect insider trading and wash trading on event contracts.
• Regulatory lawyers and policy people are in demand now. Comment letters on RIN 3038-AF82, Supreme Court amicus briefs, state AG fights. The fight is being run by lawyers, and every platform needs more of them.

If the Supreme Court takes the case this term, a decision could land by June 2027, and then we will know whether a bet on a Sunday NFL game is regulated like a Treasury swap or like a slot machine. Until then, the companies selling those bets are hiring for both outcomes.

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