CFTC prediction-markets comment period closes as 44 states and two federal courts divide on the swap question

The comment period on the CFTC's proposed prediction-markets rule — Prediction Markets; Public Interest Determinations, 91 FR 35806, RIN 3038-AF65 — closed on 27 July. Within the same week, four documents put one question on the record from opposing directions: whether a sports event contract is a swap under the CFTC's exclusive jurisdiction, or a bet governed by state gambling law and the Wire Act.

Positions as filed. The Division of Market Oversight, in Staff Letter No. 26-22 (24 July), told designated contract markets to stop submitting broad template certifications under Regulation 40.2(a) and to file an event-contract series under 40.2(d) or 40.3 — reasoning throughout from the swap definition, and doing so for the second time after Staff Letter 26-08 in March. Ohio Attorney General Andy Wilson and 43 other state attorneys general filed the contrary case (docket CFTC-2026-1189-0174): that sports bets are neither swaps nor futures; that the rule fails the major-questions doctrine and the federalism canon; that it would impliedly repeal the Wire Act and the Indian Gaming Regulatory Act; and that the CEA does not preempt state gambling law. Six states did not sign — Florida, Georgia, Missouri, New Hampshire, North Dakota and Texas.

The courts divided on the same day. Judge Katherine Menendez (D. Minn.) preliminarily enjoined Minnesota from enforcing its new prediction-market statute, Minn. Stat. § 609.7615, against CFTC-registered DCMs, finding express preemption likely because many — expressly not all — of the contracts listed by KalshiEX LLC and QCX LLC meet the CEA's swap definition. Hours later Judge Analisa Torres (S.D.N.Y.) denied Kalshi an injunction pending appeal and short-term administrative relief, restating her earlier holding that the CEA does not preempt state gambling laws and noting, citing Loper Bright, that the Commission's own preemption assertion in the proposed rule does not bind the court.

ShadowMonitor's reading of the week, offered as analysis and not as a finding: the contest has moved upstream, from whether a sports contract involves 'gaming' to whether it is a swap at all — and 26-22 relocates that determination into the settlement source and methodology of each individual filing. What remains open: both orders are interim, the Minnesota injunction running only to final judgment and the New York denial leaving Kalshi's Second Circuit appeal pending; the Commission has no fixed deadline for a final rule; and the states argue, in a footnote, that a Commission currently sitting with one commissioner may be unable to take final agency action at all. The classification dispute itself is covered in signal 005; this entry records only the week.