Key points
- The CFTC issued an interim final rule on 9 October 2026 that excludes casino-style gambling products from the swap definition.
- The exclusion covers wagers offered by operators licensed under state or tribal law, outside exchanges and other multilateral markets.
- The rule takes effect on Federal Register publication, with comments due 30 days later.
- Contracts traded on a designated contract market or swap execution facility do not meet the exclusion’s tests.
The Commodity Futures Trading Commission (CFTC) issued an interim final rule on 9 October 2026 that excludes sportsbook wagers and casino games from the federal definition of a swap. The CFTC swap rule takes effect on publication in the Federal Register, and the CFTC will take written comments for 30 days after that.
According to the CFTC’s press release 9309-26, the rule formalises the commission’s long-held view that casino-style gambling products are not swaps. Chairman Michael S. Selig said these products are not derivatives and that the commission is clarifying the limits of its authority, in line with how it has treated other products the states have historically regulated.
What the CFTC swap rule excludes
The text adds a new paragraph (7) to the swap definition in 17 CFR 1.3, according to the interim final rule (RIN 3038-AF81). An agreement is excluded when it passes two tests.
The Provider Test requires that the product is offered by a person licensed or authorised to offer gambling or accept wagers under state law or the law of a federally recognised tribe. The person must act within that licence, and the product must be regulated as gaming or gambling under that law. The Product Test requires that the product is not traded on a board of trade, an organised exchange, a swap execution facility or any other market where trades are executed multilaterally or negotiated individually.
The rule lists sports wagers accepted by a licensed sportsbook, wagers on table games, slot machines and other gaming devices accepted by a licensed casino, and other licensed games of chance such as bingo, pool wagering, lotteries and raffles.
Where prediction markets sit
The rule gives a contract traded on a designated contract market (DCM) or swap execution facility as an example of a product that fails the Product Test, because its price and economic terms are set through multilateral interaction. The CFTC states that event contracts differ from gambling products in structure: they trade on registered exchanges at market-set prices, are centrally cleared, and the exchange earns transaction fees.
The CFTC says the rule takes the position that event contracts remain within its jurisdiction. It cites the Third Circuit’s decision in KalshiEX v. Flaherty and relies on a separate proposed rule that treats event contracts as swaps.
The rule adds a limit: failing the exclusion does not make a product a swap. A casual bet between friends or an unlicensed sportsbook needs separate analysis, the CFTC says. It also affirms that state and tribal regulation of casino-style gambling is outside its jurisdiction, and that federal tax treatment stays with the Internal Revenue Code and IRS guidance.
For more on how the commission handles the sector, see EpicWins coverage of CFTC rules and the prediction markets regulation hub.
Next steps
Written comments are due within 30 days of Federal Register publication and go through Regulations.gov, referencing the rule title and RIN 3038-AF81, or by mail or hand delivery to the CFTC Secretary. The CFTC did not give a publication date in its release.
The commission asks three questions: whether the Provider Test should cover providers beyond state-regulated gaming companies and tribes, whether it is clear which agreements are “regulated as gaming or gambling” under state or tribal law, and whether a better functional test than multilateral trading exists.
The CFTC cites ongoing litigation, state enforcement actions and the economic stakes for prediction markets as its reasons for making the rule effective without prior notice and comment. It says the rule imposes no new compliance costs.
Follow the wider prediction markets story on EpicWins.
