CFTC Guidance on Casino Style Gambling Contracts and Event Contracts

Authors: Anthony Tu-Sekine and Jack Habert

On October 19, 2026, the CFTC published an Interim Final Rule (the “Casino Gambling Exclusion”)^[1] regarding the exclusion of casino-style gambling products from the definition of swap and also published a Notice of Proposed Rulemaking (the “Event Contract Inclusion”)^[2] regarding the inclusion of certain event contracts in the definition of swap.  Taken together these publications provide clear guidance to the evolving prediction markets on the products that the CFTC views as under its jurisdiction and also hints at the current litigation and related appeals that the CFTC will support.

Key Features of the Publications

Courts currently are deciding whether certain gambling and casino style contracts are “swaps.”  In the Casino Gambling Exclusion, the CFTC is codifying its long-standing position that traditional gambling products offered by State-regulated gambling companies and Tribal regulation are excluded from the “swap” definition.  This position is consistent with Congress’s intent on which products the CFTC regulates.

The CFTC’s conclusions are based on the facts that gambling products are typically conducted between a customer and a casino or bookkeeper rather than through an organized market, that the prices (or, in the case of gambling products, odds) are not set by market forces and that they are not tradeable. Products subject to CFTC regulation serve a national public interest by, among other purposes, providing a method of managing risk and price discovery or price information.  Only tradeable instruments can provide these characteristics.

The CFTC’s interim rule provides an express exclusion from the definition of “swap” that relies on a previously used provider and product test.  If the provider of the product is a state regulated or authorized provider of gambling products or a federally recognized Indian tribe and the product cannot be traded on an organized exchange, it is not a swap.

These clear tests will be helpful to participants in the prediction markets as they evaluate existing product offerings and develop new products.

In light of recent cases that the CFTC believes have undermined its authority, however, the CFTC simultaneously published the Event Contract Inclusion to further clarify the scope of its authority over all swaps.  This should be read along with this summer’s CFTC guidance regarding core principles for event contracts in its notice of proposed rulemaking regarding prediction markets and public interest determinations.^[3]

The CFTC’s position is that “swaps” include all event contracts, including those based on sports, politics, cultural and weather-related events (the “included contracts”).  The CFTC’s position is based on wide ranging industry use of CFTC rules and regulations to offer these included contracts and also to the “swap” definition itself.

The CFTC in particular notes that these included contracts are associated with a potential (even if not felt immediately or at all) financial, economic, or commercial consequence and that they are traded on CFTC regulated derivative contract markets unlike the gambling products noted in its Casino Gambling Exclusion.  The CFTC also cites its authority over trades in excluded commodities such as the included contracts.  Those excluded commodities are exempt from exchange trading requirements but remain under CFTC’s jurisdiction which preempts state law.  The CFTC did reiterate that these included contracts are subject to the CFTC’s “Special Rule” which prohibits the trading of contracts that are contrary to the public interest.

For further information about legal developments in the blockchain space, please contact a member of Seward & Kissel’s Digital Assets Practice.