CFTC Proposes New Swap Definitions Excluding Casino Games
- On September 28, the CFTC sent two rules to the White House to redefine swaps.
- One rule proposes including event contracts as swaps, while another excludes casino-style gambling products.
- The CFTC does not consider these rules economically significant and has not provided specific texts for them yet.
- Federal law grants CFTC exclusive jurisdiction over swaps on its registered exchanges.
- Courts have been divided on whether sports contracts like Kalshi’s are considered swaps, with different rulings in various circuits.
The Commodity Futures Trading Commission (CFTC) aims to clarify the legal definition of swaps by proposing new rules that include event contracts but exclude casino-style gambling products. This move is significant as it affects how prediction markets are regulated and could influence ongoing legal disputes regarding sports contracts classified as swaps.
By excluding casino-style gambling from the swap definition, the CFTC addresses concerns about broad interpretations that could encompass all types of wagers, potentially impacting state gambling laws and federal jurisdiction over such contracts. (Source)
