CFTC publishes event-contract rules: casino carve-out immediate, swap rule out for 30-day comment

The US Commodity Futures Trading Commission issued the two event-contract rules it sent to the White House ten days ago, splitting the question into one piece that takes effect on Federal Register publication and one piece that goes out for a 30-day public comment period. Release 9309-26 carries the interim final rule excluding casino-style gambling from the "swap" definition; release 9310-26 carries the notice of proposed rulemaking folding event contracts into it. Both are signed out by Chairman Michael S. Selig, per CoinDesk's reporting on the pair.

The two instruments

Interim final rule (9309-26) — Codifies that casino-style gambling products, including sportsbook wagers and casino game wagers, are not swaps. Effective immediately on Federal Register publication. Written comments accepted via Regulations.gov within 30 days of that publication. "Casino-style gambling products are not derivatives," Selig says in the release, and the agency is acting "just as the CFTC has done with respect to other products historically regulated by the states."

Notice of proposed rulemaking (9310-26) — Would expressly define "swap" to include event contracts, including those based on sports, politics, cultural, and weather-related events. 30-day public comment period beginning on Federal Register publication. "Americans use event contracts to hedge risks, speculate, and provide the public with information," Selig says. "These products are commodity derivatives squarely within the CFTC's regulatory remit under the Commodity Exchange Act."

Why issue them as a pair

The two instruments answer the same legal question — are event contracts swaps or gambling — from opposite sides. The proposed rule pulls event contracts (yes/no wagers on future outcomes, as offered by Kalshi and Polymarket) into exclusive CFTC jurisdiction. The interim final rule pre-empts the obvious counter-argument that the swap definition would then also sweep in slot-style products the agency does not want to touch. Both roads lead to the same destination: federal preemption applies to Kalshi and Polymarket, and the state anti-gambling actions against them lose their footing.

Selig is driving this alone. He is the only sitting commissioner on a five-member body — a situation CoinDesk notes is now standard across financial regulators under the Trump administration, with the SEC also down to two commissioners.

Litigation backdrop

The releases land into an active circuit split:

• New York AG suit against Polymarket, after an earlier action against Kalshi.
• Ohio and Tennessee, where Kalshi lost appellate rulings that had shielded it from state sports-gambling enforcement.
• New Jersey, whose AG petitioned the Supreme Court for review.

Per CoinDesk, states and former federal officials filed views with the Supreme Court this week asking the Court to resolve the question; three federal appellate rulings sit in the record, one against the states and two for them. The NPRM would move the "what is a swap" definition out of courtrooms and into agency rulemaking text.

TD Cowen policy analyst Jaret Seiberg, in a Friday client note cited by CoinDesk: "We view this interim final rule as designed to improve the agency's position in court as the states are arguing… Whether this actually works is a different question."

What to watch

1. Federal Register publication dates. The IFR's effective date and both comment windows run from there, not from the CFTC release date. Reginfo.gov carried the OIRA submissions filed September 30 as RIN 3038-AF81 and 3038-AF82; the published rules should map to the same RINs.
2. APA challenge to the IFR. New York or New Jersey state AGs are the likely plaintiffs. The challenge would hinge on whether the "immediately effective" carve-out satisfies the Administrative Procedure Act's notice-and-comment requirements.
3. Supreme Court cert. A grant on New Jersey's petition before the rules take effect would leapfrog the regulatory record and send the definitional question straight to the Court.
4. Comments from state AGs and tribal gaming interests on both the NPRM and the IFR carve-out — the record will shape whether a reviewing court sees the rules as reasoned decisionmaking.

Context

The CFTC moved its event-contract package to OIRA on September 30, which this site covered when the submission was made. Today's step is the public issuance from the agency itself: the proposed-rule text is now on the record, the gambling carve-out can take effect once Federal Register staff publish it, and the courts have a fresher regulatory position to point at. The Supreme Court will decide whether that position matters more than the state attorneys general lining up against it.