CFTC proposes treating event contracts as swaps while excluding casino gambling

The Commodity Futures Trading Commission proposed Friday to expressly include certain event contracts in the definition of a swap. It separately issued an interim final rule excluding casino style gambling products from that definition.

The proposed rule covers contracts based on sports, politics, cultural events and weather. The agency said these financial instruments are commonly known in the trade as swaps and that the proposal would resolve ambiguity over their classification.

CFTC Chairman Michael S. Selig said Americans use event contracts to hedge risks, speculate and obtain information about future outcomes. He described the products as commodity derivatives within the agency’s exclusive jurisdiction under the Commodity Exchange Act.

The proposal could strengthen the position of Kalshi and Polymarket US, which have defended federal oversight of their event contracts against challenges from state gambling regulators.

Explicitly classifying those contracts as swaps would reinforce the CFTC’s jurisdiction argument, although the proposal remains subject to public comment and would not automatically resolve ongoing court disputes.

The event contract measure is a notice of proposed rulemaking open for public comment. It has not been adopted as a final rule.

The separate interim final rule codifies what the CFTC described as its longstanding position that casino style gambling products, including wagers placed on sportsbooks and casino games, fall outside the swap definition.

Selig said those products are not derivatives. He framed the exclusion as clarification of the limits of the CFTC’s authority over activities historically regulated by states.

Together, the measures distinguish event contracts the agency considers financial derivatives from traditional gambling products.