CFTC Proposes Treating Event Contracts as Swaps, Exempting Casino Gambling

Proposed Rule to Classify Event Contracts as Swaps, Gambling Products Excluded

The Commodity Futures Trading Commission (CFTC) has proposed to explicitly include certain event contracts within the definition of a swap. In a separate move, the agency issued an interim final rule to exclude casino-style gambling products from that same definition.

The proposed rule targets contracts based on outcomes of sports, political events, cultural happenings, and weather. The CFTC stated that these financial instruments are commonly recognized as swaps within the industry and that the proposal aims to eliminate any ambiguity surrounding their classification.

CFTC Chairman Michael S. Selig highlighted that Americans utilize event contracts for risk hedging, speculation, and to gain insights into future developments. He characterized these products as commodity derivatives, falling under the agency’s sole jurisdiction as established by the Commodity Exchange Act.

This proposal could bolster the standing of platforms like Kalshi and Polymarket US, which have previously asserted federal oversight of their event contracts against challenges from state gambling regulators. While explicitly classifying these contracts as swaps would reinforce the CFTC’s jurisdictional claims, the proposal is still open for public comment and would not immediately settle existing legal disputes.

The measure concerning event contracts is currently a notice of proposed rulemaking and is subject to public feedback; it has not yet been finalized.

The separate interim final rule formalizes what the CFTC described as its long-held stance that casino-style gambling products, including bets placed on sportsbooks and casino games, are not considered swaps.

Selig explained that these products are not derivatives and framed the exclusion as a clarification of the boundaries of the CFTC’s authority over activities traditionally overseen by states. Collectively, these actions serve to differentiate event contracts, which the agency views as financial derivatives, from conventional gambling products.