CFTC Sets 2 Tests for Casino Bets as Event-Swap Proposal Advances

On October 9, the CFTC issued an interim final rule covering traditional gambling products. The agency says it is putting its existing position into regulation: casino-style wagers are not financial derivatives.

Sportsbook Exclusion Has Two Conditions

The 41-page rule amends the definition of a swap in 17 CFR 1.3. Its exclusion applies when a transaction meets two requirements:

• Provider Test. The operator must be licensed or otherwise authorized under US state or tribal gambling law. The wager must fall within that authorization and be regulated as gambling;
• Product Test. The transaction must not be traded on an exchange or another market involving multilateral execution or individually negotiated trades.

The rule identifies sportsbook wagers, casino games and other licensed games of chance, including lotteries and bingo, as eligible categories.

A gambling operator’s licence alone does not satisfy both tests. The structure of the transaction also counts. However, the CFTC explicitly says that failing either test does not automatically turn a product into a swap.

Sports Event Contracts Get a Separate Proposal

The CFTC’s second October 9 measure takes a different approach. Its notice of proposed rulemaking would expressly include certain event contracts in the swap definition, covering markets based on sports, politics, culture and weather.

Chairman Michael Selig argues that these instruments are commodity derivatives within the agency’s jurisdiction. The proposal aims to remove uncertainty surrounding their classification.

Some exchange-listed sports contracts already carry the swap label. A check of the CFTC’s designated contract market filings shows that CME’s Event Contract Swaps on College Football Games were recorded as certified on November 19, 2025. Their listed type is Swap (Binary Option).

The new proposal therefore concerns a classification already used in the regulator’s product database. It has not yet completed the rulemaking process.

The Rules Are at Different Stages

Both CFTC measures provide for public comments within 30 days of publication in the Federal Register. Their immediate legal effects are different.

The gambling exclusion is an interim final rule. It takes effect upon Federal Register publication, with comments accepted afterward. The event-contract measure is a proposed rule, and the CFTC must complete the rulemaking process before adopting a final version.

The pre-publication text of the interim rule still contains placeholders for its effective date and comment deadline. Those dates depend on the Federal Register publication.

The CFTC is also seeking feedback on three specific aspects of the gambling exclusion: whether additional operators should qualify, how state or tribal gambling rules should apply to these products, and whether the product test draws the correct boundary.

State Disputes Remain Unresolved

The documents arrive amid conflicting federal appeals court decisions over sports prediction markets. The CFTC’s interim rule says it does not change existing legal rights or obligations. Neither document, by itself, settles the continuing jurisdictional disputes between prediction market platforms and US states.