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CFTC excludes licensed casino and sportsbook wagers from the legal definition of a swap, and proposes putting sports, political, cultural and weather event contracts into that same definition

4 min read

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The Commodity Futures Trading Commission's interim final rule, published October 19, excludes state- and tribe-licensed casino and sportsbook wagers from the legal definition of 'swap' when they are not traded on an exchange or other multilateral or individually negotiated market. A companion proposed rule would write event contracts based on sports, politics, cultural events and weather into that same definition; the proposal says designated contract markets have self-certified thousands of them. The interim rule took effect on publication, and comments on both are due November 18.

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The Commodity Futures Trading Commission has excluded state- and tribe-licensed casino and sportsbook wagers from the legal definition of a swap. The rule was published in the Federal Register on October 19, 2026 and took effect that day; the Commission says it "affirms and codifies" a longstanding position. In the same issue the Commission proposed writing event contracts on sports, politics, cultural events and weather into that same definition instead.

What is now excluded

The interim final rule adds a new paragraph (7) to the "swap" definition in 17 CFR 1.3. The exclusion has two components, which the rule calls the Provider Test and the Product Test, and a wager is covered only if both are met.

Under the first, the agreement must be "offered or entered into by a person that is licensed or otherwise authorized to offer gambling or gaming products, or accept wagers" under the law of a state or the law of a federally recognized Indian tribe pursuant to the Indian Gaming Regulatory Act; that person must be "acting within the scope of that license or authorization"; and the agreement must itself be "regulated as gaming or gambling under applicable State or Tribal law." Under the second, it must not be "traded on a board of trade, an organized exchange, a swap execution facility, or any other market in which trades are executed multilaterally or subject to individual negotiation."

Provided those requirements are met, and without limiting their generality, the rule names three kinds of wager as excluded: any in which "a licensed sportsbook or sports wagering operator accepts a wager on the outcome of one or more sporting events"; any in which a licensed casino operator accepts a wager "in connection with a casino table game, slot machine, or other electronic gaming device"; and any in which a licensed operator accepts a wager "in connection with any other game of chance (such as bingo, pool wagering, lotteries, and raffles)."

What the proposal would include

A separate, companion proposed rule would add event contracts, "including those based on sports-, politics-, cultural-, and weather-related events," to the Commission's own "swap" definition at 17 CFR 1.3; the proposal calls that a non-exhaustive list. It cites the agency's history of overseeing such contracts, including a January 3, 2022 order penalizing Blockratize, Inc., which does business as Polymarket.com, for offering event contracts on various economic, political and sports events without registering with the Commission. It says designated contract markets — the exchanges the Commission designates — have self-certified thousands of event contracts based on sports, politics, cultural events and weather, and names CME Group as one such exchange, which it says has self-certified numerous event contracts based on sports and elections. A footnote says the proposed addition "would not reach casino-style gambling products".

What it means for exchange-listed contracts

The Product Test is what keeps exchange-traded contracts outside the exclusion. The rule says a transaction entered into on a trading facility, including a designated contract market, or on a swap execution facility would not satisfy it, because its price and other economic terms "would be determined through the competitive interaction of multiple buyers and sellers on a multilateral basis".

The rule adds that nothing in it "should be read to imply or presume that an agreement, contract, or transaction that does not meet any of the requirements of this exclusion is necessarily a swap." A footnote says the exclusion it provides is non-exclusive, and that other gambling-style transactions may not be swaps given how they are structured and whether they are tradable. Exchange-listed event contracts are the companion proposal's subject instead; it says the Commission's view is that the best reading of the statute is that event contracts based on sports-, political-, cultural- or weather-related events qualify as swaps under each of the statutory prongs it cites. Being a proposal, it changes nothing yet.

The dates

The interim final rule's DATES paragraph reads: "Effective Date: This interim final rule is effective October 19, 2026. Request for comment: Comments must be received by November 18, 2026." The proposed rule prints the same comment date. So comments stay open on both through November 18, 2026, a Wednesday, even though the exclusion took effect on publication. Each document's voting summary says Chairman Selig voted in the affirmative and that no Commissioner voted in the negative.

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