The Commodity Futures Trading Commission has made a significant distinction between casino-style gambling and event contracts in derivatives oversight.
In an interim final rule, the CFTC clarified that casino-style gambling products, such as sportsbooks and casino games, are excluded from the swap definition as they are not considered derivatives.
CFTC Chairman Michael S. Selig stated, “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.”
Furthermore, the agency has also proposed a rule to include event contracts based on sports, politics, cultural, and weather-related events in the swap definition to eliminate any ambiguity surrounding their regulatory treatment.
“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 are classified as swaps, they would fall under the CFTC’s jurisdiction, potentially impacting platforms like Kalshi and Polymarket that have faced legal challenges from state gambling regulators.
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