CFTC Proposes Swaps Rule for Event Contracts, Excludes Casino Bets

The Commodity Futures Trading Commission has drawn a line. The interesting part is where it lands.

Event contracts are the prediction markets where people take positions on elections, games and the weather. Under a new proposal, they would be expressly defined as swaps. Casino-style gambling would not.

Both measures come from the same agency and the same chairman, Michael S. Selig. Together they answer a question prediction markets have carried for years: which bets count as derivatives, and which are simply bets.

The Proposal Would Write Event Contracts Into the Swap Definition

The first measure is a Notice of Proposed Rulemaking, so it asks for comment rather than settling the matter. It proposes providing clarity by expressly further defining the term swap to include event contracts. That covers contracts based on sports, politics, cultural and weather-related events.

The proposal's own reasoning is that these contracts are financial instruments commonly known to the trade as swaps. The change, it says, would resolve any ambiguity about them.

Selig places the user at the centre of it: “Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events.”

He is just as clear about whose jurisdiction he believes this is. The products, he says, are “commodity derivatives squarely within the CFTC's regulatory remit under the Commodity Exchange Act and are within the agency's exclusive jurisdiction.”

Comments must be submitted in writing through Regulations.gov. They are due within 30 days of the proposal's publication in the Federal Register. Neither measure had been published there when this was written, so those 30 days have not started ticking.

Casino-Style Wagers Stay Outside, Effective Immediately

The second measure arrives as an Interim Final Rule, a rarer instrument that skips the usual proposal stage. It codifies the CFTC's longstanding position that casino-style gambling products are excluded from the swap definition. That takes in wagers placed on sportsbooks and casino games. It takes effect immediately upon publication in the Federal Register. Written comments are due through Regulations.gov within 30 days of that same publication.

Selig's rationale is one sentence long, and worth quoting in full:

“Casino-style gambling products are not derivatives.”

Three words, and no throat-clearing. He frames the exclusion as the agency marking the edge of its own territory: “Just as the CFTC has done with respect to other products historically regulated by the states, the Commission today provides clarity regarding the limits of its regulatory remit by codifying the exclusion of casino-style gambling products from the ‘swap' definition.”

Read the two documents together and the boundary looks like a venue question as much as a product one. A contract based on a sports outcome can sit inside the swap definition. A wager placed on a sportsbook is named as outside it.

How the Agency Explains the Line to Everyone Else

The CFTC keeps a public page on prediction markets, and it is unusually plain about the mechanics. Event contracts, it says, are typically structured as swaps. They derive their value from an underlying commodity, which in this case is the outcome of an event. They can be used to hedge economic risk or to speculate on prices and outcomes. A binary contract carries a fixed payout, usually $1, and an expiration. That is either a specific time or the natural conclusion of the event.

That page also supplies the timeline. In the United States, prediction markets have been around since 1988. The CFTC has regulated them since 2004. The authority to prohibit trading in certain types of event contracts traces to the Dodd-Frank Act in 2010, which amended the Commodity Exchange Act, at 7 USC § 7a-2 (5)(C).

What Is Confirmed, and What Is Still in Draft

The White House regulatory review record lists the event contracts rule as RIN 3038-AF82, under the title Further Definition of “Swap” to Include Event Contracts. It was received for review on 09/28/2026. It sits at the proposed rule stage. That fits a measure working its way toward a Federal Register appearance.

There is history behind it. The agency withdrew an earlier 2024 event contracts rulemaking. It told the record that it did not intend to issue final rules from that proposal. A later Advance Notice of Proposed Rulemaking asked for comment on the core principles and regulations that should apply to prediction markets. It noted that the comments may inform future rulemaking.

What remains unconfirmed is the part readers will want most: the full regulatory text of both measures, including the exact scope of the casino-style exclusion. The rule documents were not readable, and the Federal Register had not published either one. No venue data on trading volumes or open interest was checked, so the market response is not part of this picture.

When the texts land, the comment clocks start. Until then, the line the CFTC has drawn is clearer in principle than in print.