CFTC proposes to treat event contracts as swaps, not casino bets

The Commodity Futures Trading Commission on Friday, October 9, 2026, proposed to treat event contracts as swaps, and wrote a separate rule to keep licensed sportsbook and casino wagers out of that category. The two texts are the agency’s answer to a split in the federal courts over whether a sports contract is a financial product or a bet.

An event contract pays based on whether something specific happens, such as a game, an election or a storm. A swap is the legal category for a wide set of financial contracts. The CFTC is the US regulator of futures and swaps.

“Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events,” Chairman Michael S. Selig said.

The sportsbook rule takes effect when the Federal Register, the government’s journal of official rules, publishes it, even while comments are still open. The proposal to call event contracts swaps does not take effect on publication. Comments on each text are due 30 days after that text’s own publication. Neither document names a publication date, so neither deadline is a calendar day yet.

The federal rule for a swap already limits an ordinary customer to an exchange the CFTC has licensed. The proposal would apply that same limit to event contracts.

The fear the courts named

On April 6, 2026, in a New Jersey case brought by Kalshi, an exchange licensed by the CFTC, the US Court of Appeals for the Third Circuit held that sports event contracts on a licensed exchange are swaps, and that the state’s gambling laws do not reach them.

On Friday, August 28, 2026, the US Court of Appeals for the Ninth Circuit refused to block Nevada’s gambling regulator from enforcing its rules against Kalshi’s sports contracts. The court said those contracts were likely not swaps.

On Friday, September 25, 2026, the US Court of Appeals for the Sixth Circuit held that Kalshi’s sports event contracts are not swaps, and left Ohio and Tennessee free to apply their gambling laws. It also held that even if the contracts were swaps, the law the CFTC enforces would not block those two states.

The CFTC’s proposal says the Ninth Circuit and the Sixth Circuit resisted treating sports event contracts as swaps, largely because they feared that reading would pull casino bets into the federal law the CFTC enforces. The sportsbook rule is the agency’s written answer to that fear. It points to the Sixth Circuit’s example: if sports contracts were swaps, every sports wager, including one in a casino, on an online sportsbook, or between two friends at a bar, would have to take place on a federal market.

The proposal would add event contracts, including those on sports, politics, cultural events and weather, to the definition of a swap. That is the reading the Third Circuit adopted.

“These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction,” Selig said.

The proposal takes the Third Circuit’s side on the swap question. It does not answer the Sixth Circuit’s further holding, that the law the CFTC enforces would not block Ohio or Tennessee even if the contracts are swaps. Whether those states, or Nevada, can still enforce their gambling laws is for the courts.

The Commission says the sportsbook rule does not change anyone’s legal duties under the commodity law. Casino-style products were already outside its jurisdiction, it says, and recent court decisions had created uncertainty about that line.

Where a bet stays a bet

In the United States, states and some tribal governments license casinos and sportsbooks. The CFTC licenses exchanges.

The sportsbook rule applies only when the operator is authorized under state law or qualifying tribal law, and acts within that authority. The wager must be regulated as gambling there, and it must not trade on an exchange or any other organized market. The rule names a licensed sportsbook wager, a licensed casino table game or slot, and licensed games of chance such as bingo, a lottery or a raffle.

“Casino-style gambling products are not derivatives,” Selig said.

A sports contract on an exchange is not covered by that rule just because it is about a game.

The proposal says that over the past several years, licensed exchanges have self-certified thousands of event contracts on sports, politics, cultural events and weather. Self-certification means the exchange told the CFTC the contract met the rules, and then listed it. CME Group, a longstanding exchange operator, has self-certified numerous sports and election event contracts as swaps, the proposal says.

The Commission can adopt the proposal, change it, or drop it after the comments arrive. What is set to take effect, once the Federal Register publishes it, is the narrower rule: a licensed sportsbook wager that never trades on an exchange is not a swap.