CFTC submits rules to define event contracts as swaps, defying states’ gambling claims

The Commodity Futures Trading Commission just drew a line in the regulatory sand. On September 29, the agency submitted two rule proposals to the White House that would formally classify event contracts as swaps under the Commodity Exchange Act, a move that directly challenges multiple states arguing these products are simply gambling in a fancier wrapper. The proposals are designed to carve out a clear framework: legitimate event contracts get CFTC oversight, while what the agency calls “casino-style gambling products” get shown the door. What the CFTC is actually proposing The CFTC’s two proposals aim to establish a method for determining when these contracts qualify as swaps, which would place them squarely under federal jurisdiction. This isn’t the agency’s first move in the space this year. Back on June 10, the CFTC issued a notice of proposed rulemaking to amend Regulation 40.11, which governs how the commission reviews certain event contracts listed on exchanges. And on May 13, the agency granted no-action relief for swap data reporting on fully collateralized event contracts traded on designated contract markets, or DCMs. By defining event contracts as swaps, the CFTC would...