Finance10 October, 20262 min read
CFTC Chairman Michael Selig Proposes Including Sports Event Contracts in Swap Definition
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CFTC proposed including event contracts on prediction markets as swaps under federal derivatives law. Interim rule excludes casino-style gambling from the swap definition.
23 outlets told this the same way.
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CFTC draws a line
The Commodity Futures Trading Commission proposed adding event contracts covering four categories, including sports, to its swap definition while issuing a separate interim final rule excluding casino-style gambling products from that definition. CFTC Chairman Michael Selig said the agency’s event-contract approach would keep the products “within the agency’s exclusive jurisdiction under the Commodity Exchange Act,” and the CFTC described the contracts as financial instruments commonly recognized in the derivatives industry as swaps.
The CFTC’s interim final rule codified its view that “Casino-style gambling products are not derivatives,” and it said the exclusion takes effect immediately upon Federal Register publication. The CFTC also set a public comment period lasting 30 days after publication for the inclusion proposal, while it set a separate 30-day written comment period tied to the casino exclusion’s Federal Register publication.
States challenge the swap
Federal appeals courts have reached conflicting decisions on whether states can regulate sports event contracts, with the Sixth Circuit rejecting Kalshi’s injunction requests in disputes involving Ohio and Tennessee. The Sixth Circuit’s September 25 ruling held that Kalshi’s sports-event contracts had not established that the sports contracts at issue qualified as swaps, and it also found that the Commodity Exchange Act did not preempt Ohio’s or Tennessee’s gambling laws.
The Third Circuit’s April decision preserved a preliminary injunction protecting Kalshi against New Jersey enforcement, and it found that the sports contracts qualified as swaps and that the exchange had shown a reasonable likelihood of succeeding on its federal preemption argument. The NFL backed New Jersey’s request for Supreme Court review of Kalshi’s sports contracts, while the CFTC’s rulemaking aimed to solidify Chairman Mike Selig’s view that prediction markets transactions are properly regulated by his agency alone.
New entrants and court risk
Blockchain.com sought CFTC licenses to offer event contracts, and it pursued approval as a Designated Contract Market and also as a futures commission merchant. Cryptopolitan reported that the volume of the prediction market reached approximately $188 billion in the third quarter of 2026, up nearly 70% from the prior quarter and about 21 times the level a year earlier, with Kalshi driving the growth.
“Blockchain.com is seeking licenses from the Commodity Futures Trading Commission (CFTC) to offer event contracts.”
Cryptopolitan also said Blockchain.com’s entry depends on the Supreme Court resolving the jurisdictional dispute, because state-level regulation could increase licensing and compliance costs and reduce liquidity. TD Cowen policy analyst Jaret Seiberg argued that the casino exclusion could strengthen the agency’s legal position by countering arguments that its swap definition would make state-regulated betting illegal, even as the underlying state versus federal fight continues.