CFTC proposes treating event contracts as swaps while excluding casino gambling

On October 9, 2026, Commodity Futures Trading Commission Chairman Michael S. Selig issued two measures to establish federal authority over prediction markets. The agency proposed incorporating event contracts on sports, politics, culture, and weather into the federal definition of swaps under the Commodity Exchange Act. Simultaneously, an interim final rule explicitly excluded casino-style games and sportsbooks from swap regulation. The move aims to strengthen the CFTC's legal standing against state regulators and platforms like Kalshi and Polymarket amidst ongoing federal court battles.

CFTC proposed rule on event contracts

• ▪Commodity Futures Trading Commission Chairman Michael S. Selig stated that event contracts on sports, politics, cultural events and weather are commodity derivatives within the agency's exclusive federal jurisdiction under the Commodity Exchange Act
• ▪The Commodity Futures Trading Commission explains that event contracts allow traders to buy yes-or-no positions on future outcomes with fixed payouts, typically $1, to hedge risk or speculate
• ▪On October 9, 2026, the Commodity Futures Trading Commission proposed expanding the Commodity Exchange Act's legal swap definition to expressly include event contracts on sporting, political, cultural, and weather-related outcomes traded on registered designated contract markets

Prediction market regulatory supervision

• ▪Prediction market operators Kalshi and Polymarket seek exclusive regulatory supervision under the Commodity Futures Trading Commission rather than state gambling boards
• ▪The Commodity Futures Trading Commission has countersued several states that have sued it to defend its regulatory jurisdiction over prediction market operators

Opposition to CFTC event contract authority

• ▪State officials and former federal officials submitted filings opposing the Commodity Futures Trading Commission's prediction market interpretation that event contracts fall under its exclusive jurisdiction to the U.S. Supreme Court
• ▪Better Markets policy director Benjamin Schiffrin argued on October 9, 2026 that sports event contracts facilitate sports betting and should remain subject to state gambling laws

State lawsuits and court rulings

• ▪In a September 25, 2026 ruling involving Kalshi, the Sixth Circuit held that Kalshi did not prove its sports contracts were swaps and that federal law did not preempt state gambling laws
• ▪Several U.S. states have sued prediction market platforms, accusing them of operating illegal gambling businesses under state law

Interim rule excluding casino gambling

• ▪TD Cowen analyst Jaret Seiberg stated the Commodity Futures Trading Commission's interim final rule aims to counter state arguments that federal swap definitions would make state-licensed casino and sportsbook wagers federally illegal
• ▪An October 9, 2026 Commodity Futures Trading Commission interim final rule codifies the exclusion of sportsbook wagers and casino-style gambling products from the legal definition of a swap, leaving them under state oversight
• ▪Commodity Futures Trading Commission Chairman Michael S. Selig stated that casino-style gambling products, including sportsbook wagers and casino games, are not derivatives, defining the limits of the agency's regulatory reach

Timeline and procedure for CFTC rules

• ▪The Commodity Futures Trading Commission established a 30-day public comment window following Federal Register publication for both the proposed event contract swap rule and the interim casino-style gambling exclusion rule
• ▪The Commodity Futures Trading Commission's interim final rule excluding casino-style gambling from swap regulation takes effect immediately upon publication in the Federal Register

CFTC commission leadership

• ▪Commodity Futures Trading Commission Chairman Michael S. Selig is currently the sole commissioner operating the five-member agency
• ▪President Donald Trump has declined to nominate additional commissioners to the Commodity Futures Trading Commission

Debatable claims

• ▪Classifying event contracts as swaps fails to protect prediction markets from state gambling laws
• ▪A single-commissioner CFTC lacks the institutional mandate to enact major jurisdictional rules
• ▪Event contracts traded on prediction markets are financial derivatives rather than gambling products