Federal regulators are drawing a sharp line between casino-style gambling and event contracts in derivatives oversight.
The Commodity Futures Trading Commission says it published an interim final rule codifying the exclusion of casino-style gambling products, including sportsbooks and casino games, from the swap definition.
The regulator says casino-style gambling products are not derivatives.
Says CFTC Chairman Michael S. Selig,
“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.”
The agency also released a notice of proposed rulemaking to expressly include event contracts based on sports, politics, cultural, and weather-related events in the swap definition.
The proposal identifies these contracts as financial instruments commonly referred to as swaps and seeks to clarify their regulatory treatment by eliminating any ambiguity surrounding them.
“Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events. 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.”
If event contracts qualify as swaps, they would fall under the CFTC’s jurisdiction, which Selig has argued is exclusive. That position would put platforms such as Kalshi and Polymarket beyond the reach of state gambling regulators. Several states have sued prediction-market operators over allegations of illegal gambling, prompting the CFTC to countersue in a bid to defend its regulatory authority.
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