CFTC Wants Event Contracts Defined as Swaps, but Not Casino Games
The CFTC sent the White House two rules to classify event contracts as swaps while excluding casino-style gambling from that definition.Summary
The Commodity Futures Trading Commission (CFTC) has submitted two rules to the White House's Office of Information and Regulatory Affairs (OIRA) that would redefine the legal term "swap," a definition central to prediction markets' battle with state gambling regulators. The first is a proposed rule, "Further Definition of 'Swap' to Include Event Contracts," which would undergo public comment before taking effect; it aims to bring event contracts within the CFTC's exclusive jurisdiction over swaps. The second is an interim final rule that would exclude "casino-style gambling products" from the swap definition and take effect immediately upon publication, with comments collected afterward. Neither rule is marked economically significant, and no legal text has been released yet.
Prediction markets like Kalshi argue their sports contracts are swaps, putting them beyond state gambling regulators' reach. CFTC Chairman Michael Selig has supported this position, suing at least nine states. However, courts are split: the Third Circuit sided with Kalshi in April, the Ninth Circuit ruled for Nevada in August, and on September 25, the Sixth Circuit unanimously held that Kalshi's sports contracts are not swaps because sporting events lack inherent financial consequences. New Jersey has asked the Supreme Court to resolve the split. The Sixth Circuit also warned that a broad swap definition could encompass virtually all wagers, including casino games and charity raffles, which the casino carveout addresses. Additionally, the Dodd-Frank Act requires the CFTC and SEC to define "swap" jointly with the Federal Reserve, but both OIRA listings name only the CFTC. Once OIRA completes its review, the CFTC can publish the rules in the Federal Register.
(Source：Bitcoin News)