CFTC proposes treating event contracts as swaps while excluding casino gambling

CFTC Proposes Treating Event Contracts as Swaps, Excluding Casino Gambling

Introduction

The Commodity Futures Trading Commission has proposed a new rule that would include certain event contracts in the definition of a swap, while excluding casino-style gambling products.

Background

The proposed rule would cover contracts based on sports, politics, cultural events, and weather, and is open for public comment. The CFTC's jurisdiction over these financial instruments would be strengthened, but the proposal remains subject to ongoing court disputes.

Details of the Proposal

The proposed rule explicitly classifies event contracts as swaps, which would reinforce the CFTC's jurisdiction argument. The agency has defended federal oversight of event contracts against challenges from state gambling regulators.

Implications

The proposal could have significant implications for the futures industry, particularly for companies that offer event contracts such as Kalshi and Polymarket US. These companies have defended federal oversight of their products against challenges from state regulators.

Conclusion

The proposed rule is a significant development in the CFTC's efforts to clarify the definition of a swap. The agency's jurisdiction over event contracts would be strengthened, but the proposal remains subject to ongoing court disputes.