The U.S. Commodity Futures Trading Commission (CFTC) released a proposed rule on October 9 local time that would expressly include event contracts in the definition of a swap. It would cover contracts based on sports, political, cultural and weather-related events, among others.
The CFTC said these contracts are financial products commonly known in the industry as swaps and that the proposal is intended to resolve uncertainty over their classification. Chairman Michael Selig said event contracts are commodity derivatives under the Commodity Exchange Act (CEA) and fall within the CFTC's exclusive jurisdiction. The comment period will run for 30 days from publication of the proposal in the Federal Register.
The same day, the CFTC also announced an interim final rule codifying its existing position that casino-style gambling products, including bets placed through sportsbooks and casino games, are not swaps. Selig said casino-style gambling products are not derivatives and described the rule as a step to clarify the limits of the CFTC's regulatory remit. The rule takes effect immediately upon publication in the Federal Register, with comments accepted for 30 days after publication.
The announcements did not resolve the jurisdictional dispute with state gambling laws. Litigation continues over whether state gambling laws may be applied to sports event contracts offered by prediction markets such as Kalshi and Polymarket. CoinDesk reported that federal appellate rulings were divided, with one favoring the CFTC's position and two favoring the states.
The proposal to expressly include event contracts in the swap definition remains at the proposal stage, and the announcements did not specify whether it will be finally adopted or when it would take effect.