Brief
CFTC proposes rule changes to classify event contracts as swaps
The Commodity Futures Trading Commission released two measures on Oct. 9 to clarify federal oversight of prediction‑market contracts.
By Felo News Desk · Published
The Commodity Futures Trading Commission (CFTC) announced two measures on Oct. 9 that would delineate which prediction‑market contracts are treated as swaps under federal law and which remain gambling products overseen by states, according to ReadWrite.
What happened
The first measure expands the definition of a swap to include contracts tied to cultural events, weather, politics and sports, asserting that these products are commonly treated as swaps in trading markets. The second measure is an interim final rule that explicitly excludes casino‑style gambling, such as sportsbook wagers and casino games, from the swap definition; it takes effect upon publication in the Federal Register. Both measures carry a 30‑day public comment period. The filings were sent to the White House Office of Information and Regulatory Affairs on Sept. 28 before their release.
What the reports add
ReadWrite notes that the CFTC’s position places the rulemaking at the center of an ongoing jurisdictional fight, with the agency claiming exclusive authority over event contracts under the Commodity Exchange Act. The agency argues the rule would resolve uncertainty about the contracts’ status under federal law. It also highlights that the distinction matters because states argue prediction markets fall under state gambling authority, and that the classification does not automatically settle whether federal oversight precludes state regulation.
What was said
The CFTC said the products are “commonly treated as swaps in trading markets” and that the rule would “resolve uncertainty about their status under federal law.” The agency’s statements are reported by ReadWrite.
How it came about
The rulemaking follows a split between the Third and Ninth Circuit Courts of Appeals over whether event contracts qualify as federally regulated swaps, a dispute that has involved firms such as Kalshi and Polymarket. New Jersey has asked the Supreme Court to consider a related case, and 39 states and the District of Columbia, together with the NFL, have urged the Court to take up the issue. The CFTC’s measures aim to codify its interpretation while the broader authority question remains contested in court.
Key facts
- The CFTC issued two measures on Oct. 9 to define prediction‑market contracts as swaps or gambling products. (readwrite.com)
- The first measure expands the swap definition to include contracts tied to cultural events, weather, politics and sports. (readwrite.com)
- The second measure excludes casino‑style gambling from the swap definition and takes effect upon Federal Register publication. (readwrite.com)
- Both measures have a 30‑day public comment period. (readwrite.com)
- The filings were sent to the White House Office of Information and Regulatory Affairs on Sept. 28. (readwrite.com)
Sources
- [1] readwrite.com — originally reported as “Prediction Markets: CFTC Swap Rules Explained”
