The Commodity Futures Trading Commission (CFTC) has proposed writing sports, political and other event contracts into the federal definition of a swap. In a separate interim final rule it has excluded state-licensed sportsbooks, casino games and lotteries from that definition. The two moves are the agency’s clearest attempt yet to settle the jurisdictional fight over prediction markets.

Both measures were announced on 9 October. The notice of proposed rulemaking would add “event contracts, including those based on sports-, politics-, cultural, and weather-related events” to the list of products that count as swaps under the Commodity Exchange Act. Swaps fall within the CFTC’s exclusive jurisdiction. The interim final rule takes effect as soon as it is published in the Federal Register. It says casino-style gambling products offered under a state or tribal licence, and not traded on an exchange, are not swaps.

“These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction,” CFTC chairman Michael Selig said of event contracts. “Casino-style gambling products are not derivatives,” he said in the announcement of the interim rule.

Answering the states’ main argument

The interim rule takes on the central argument of New Jersey and its supporters in Flaherty v. KalshiEX, the case now pending before the US Supreme Court. That argument is that treating Kalshi’s sports contracts as swaps would bring every sports bet in the country under federal control. The rule quotes New Jersey’s petition and the brief filed on 7 October by Ohio, 38 other states and the District of Columbia, which warned that the CFTC would become “a national gambling czar”.

Under the rule, a product falls outside the swap definition if it is offered by a state- or tribal-licensed operator within that licence and is not traded on an exchange or other multilateral market. Sports wagers accepted by a licensed sportsbook, table games, slots and other electronic gaming devices, bingo, pool betting, lotteries and raffles are all named. The CFTC says the difference lies in tradability, central clearing, market-set rather than house-set prices, and exchange rules that stop a designated contract market (DCM) from banning winning customers the way a sportsbook can.

The agency skipped advance public comment on the interim rule, citing the split between federal appeals courts and state enforcement actions that it said threatened to “wreak havoc” on DCMs nationwide.

A split in the courts

The proposed rule points to “widespread confusion and disuniformity” in the courts. The Third Circuit held in April that Kalshi’s sports contracts are swaps. The Ninth Circuit ruled the opposite way in Nevada on 28 August, and the Sixth Circuit followed on 25 September. The proposal also lists state measures against prediction markets, including a criminal ban in Minnesota, criminal charges in Arizona and geofencing orders in Michigan, Washington and Nevada.

According to the proposal, event contracts on DCMs averaged about $1.5bn in monthly volume in August, of which about $1.2bn was tied to sports. More than 15 DCM applications have been pending since 2025. Neither rule includes age limits, advertising rules or integrity provisions such as the prohibited-market list the NFL asked for in its Supreme Court brief on 8 October. The proposal’s cost-benefit section acknowledges that retail traders could be harmed, citing features “associated with addictive potential” such as near misses and loss-chasing.

Built for the courtroom

Analysts read the timing as legal positioning. Jaret Seiberg of TD Cowen told CoinDesk the interim rule was “designed to improve the agency’s position in court”. He added that whether it would work was “a different question”. Since the Supreme Court’s 2024 ruling in Loper Bright, courts no longer defer to agencies’ readings of the statutes they administer, so judges will decide for themselves what counts as a swap.

Comments on the proposal will be open for 30 days after it is published in the Federal Register, which had not happened as of 12 October. Kalshi’s response to New Jersey’s Supreme Court petition is due on 9 November. The court is not expected to decide whether to take the case before December.

Stake has won a partial injunction from a federal court in São Paulo that lets it keep operating in Brazil until 25 October. It is the first operator to win any relief in court against the government’s emergency ban on online betting.

Judge Cristiane Farias Rodrigues dos Santos of the 9th Federal Civil Court of São Paulo signed the decision on 8 October, according to CNN Brasil and Estadão. The case is a writ of mandamus filed by Stake Brazil Ltda, the licensed company behind stake.bet.br. It names the Ministry of Finance’s Secretariat of Prizes and Bets (SPA), the telecoms regulator Anatel and the central bank. The authorities have ten days to respond.

What Stake won, and what it did not

Under the order, the authorities may not treat Stake’s licence as extinct before 25 October, or until a later court decision. Any blocking or redirection of stake.bet.br and its apps that rests only on ending the licence early is suspended. The relief applies to Stake alone.

The judge rejected Stake’s two main requests: to suspend Provisional Measure 1.394/2026 entirely, and to keep operating until its licence expires on 31 December 2029. She granted only Stake’s fallback request, which was to keep the 30-day transition period the measure itself provides for. She also found that the measure was not obviously unconstitutional at this stage.

The judge reasoned that the effects of an abrupt shutdown were “partially irreversible” and would not be fully repaired by any later compensation, according to Estadão’s account of the ruling. She added that keeping the licence alive until 25 October did not amount to granting a new right.

The injunction carries conditions. Stake must keep its identity, age, anti-money-laundering and responsible gambling controls in place. It must let customers withdraw and keep enough funds to cover balances, and it may not accept bets funded by social benefit payments. It is also barred from taking on new customers or running new promotions or bonuses.

In its filing, Stake told the court it had paid the R$30m licence fee, paid in R$87.8m of share capital, spent about R$128m on investment and costs, and employs 41 people in Brazil.

Government to appeal

The Attorney General’s Office (AGU) said it would appeal to the Federal Regional Court of the 3rd Region. Separately, on the night of 5 October, Advocate-General Jorge Messias asked Supreme Court Justice Luiz Fux to keep the measure in force while the court considers challenges brought by the industry associations ANJL and IBJR, according to Agência Brasil. The AGU pointed to a 140% rise in public health treatment for gambling disorders. Fux has not yet ruled.

President Lula signed the measure on 25 September and it took effect the same day. Deposits were blocked immediately, licensed sites went offline on 6 October, and all betting licences are due to end on 25 October, which is also the day of the presidential run-off. Congress has 120 days to approve the measure or it lapses. Lawmakers have tabled amendments that would soften it, including one that would limit the ban to online casino and keep sports betting.

Market fallout

The shutdown is already showing in the data. According to Blask’s weekly market report, its index of player interest in Brazilian igaming fell 78.2% in the week of 28 September to 4 October, after a 20.1% fall the previous week. The ANJL’s monitoring service recorded a jump in the number of illegal sites targeting Brazilian players in the days after the decree.

Football has also turned against the ban. On 8 October Flamengo replaced the logo of its main shirt sponsor, Betano, with the industry campaign slogan “Proibir não é proteger” (“Banning is not protecting”). The club has asked to join the case at the Supreme Court.

The ruling gives other licensees a template for similar individual claims. But the judge’s refusal to suspend the measure itself means the injunction buys Stake time rather than a way back. Unless the Supreme Court or Congress intervenes, the licences end on 25 October.

The National Football League has asked the US Supreme Court to hear New Jersey’s prediction-market case against Kalshi. It argued that sports event contracts are gambling that states should regulate, not swaps under federal control.

The league filed an amicus brief on 8 October in Flaherty v. KalshiEX (No. 26-299). The case is New Jersey’s petition to overturn the Third Circuit’s 2-1 ruling of 6 April, which held that Kalshi’s sports contracts are swaps within the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), so state gambling law is pre-empted. The NFL filed on its own, with no other league joining. Its legal team includes former US Attorney General William Barr.

“It is important that this Court grant certiorari now to provide clarity before another NFL season goes by,” the league wrote in its brief.

Integrity and age limits

Much of the brief focuses on integrity. The NFL said neither the CFTC nor the exchanges had adopted its list of prohibited markets, which covers kicker misses, injuries, officiating calls, play types that can be known in advance and broadcast mentions. It also said they had refused a minimum age of 21. Kalshi allows customers aged 18 and over.

The league contrasted the CFTC’s 543 employees nationwide with gaming regulators in Nevada and Pennsylvania, which it said each employ close to 400 people. It said that on the first Sunday of the 2026 season, $1.8bn of $3.3bn in total prediction-market volume was tied to NFL games.

“Billions of dollars will be bet on NFL games through prediction markets each season, and any delay from the Court will result in increasing consumer harm and risk to game integrity,” the brief said. It also argued that reading “swap” as broadly as the Third Circuit did raises Commerce Clause and major-questions problems, because regulating gambling has long been a state police power.

Kalshi and the CFTC push back

Kalshi said the league had not engaged with it. “We have consistently tried to engage proactively and constructively with the NFL to collaborate on market integrity with no response,” spokesperson Elisabeth Diana told CNBC. The CFTC’s public affairs director, Brooke Nethercott, told ESPN it was “unfortunate the NFL declined to sign an MOU” with the agency. The industry’s Coalition for Prediction Markets said national financial markets require a national regulator.

The NFL’s position sets it apart from some other leagues. The NHL has commercial deals with both Kalshi and Polymarket, and MLS and UFC have partnered with Polymarket. The NFL, NBA and PGA Tour have no prediction-market partnerships.

A crowded docket

The league is one of a growing number of amici backing New Jersey. A coalition of 38 states plus Ohio and the District of Columbia filed on 7 October. On 8 October, a group of 145 tribes and tribal organisations, including the Indian Gaming Association and the National Congress of American Indians, filed a brief arguing that Kalshi’s sports contracts violate the Indian Gaming Regulatory Act. Briefs have also come from former CFTC chair Gary Gensler, former senator Chris Dodd, the International Association of Gaming Regulators and, late on 8 October, the American Gaming Association.

The split within Indian Country is widening. The same week, four tribes (the Alabama-Quassarte Tribal Town, Greenville Rancheria, Kletsel Dehe Wintun Nation and Alturas Indian Rancheria) launched branded prediction apps that run on Kalshi’s exchange.

New Jersey’s petition comes after a run of appellate defeats for Kalshi elsewhere. The Ninth Circuit ruled against it in Nevada on 28 August and in a tribal case on 16 September. The Sixth Circuit ruled on 25 September that the contracts do not meet the statutory definition of a swap. Those rulings came in preliminary-injunction proceedings.

Kalshi’s response to the petition is due on 9 November after an extension. The court is not expected to decide whether to take the case before December at the earliest. If it does, a ruling this term would settle whether sports event contracts sit with the CFTC or the states, which is the question at the centre of more than 30 pending lawsuits.