CFTC Moves to Classify Event Contracts as Swaps — Attempting to Settle the Core SCOTUS Question by Rule
The CFTC, led by Chairman Michael Selig, moved on October 9 to explicitly classify event contracts as swaps under the Commodity Exchange Act, which would place prediction market contracts squarely under federal swap regulation. The scope covers sports, political, cultural, and weather contracts, while a separate provision excludes casino-style gambling and sportsbook wagers. Selig said the aim is to remove 'any ambiguity' about these contracts. The action targets the exact question dividing the federal circuits and now before the Supreme Court — whether event contracts are 'swaps' — and represents an attempt by the federal regulator to settle that question by rule while the courts remain split.
The Commodity Futures Trading Commission moved on October 9, 2026 to explicitly classify event contracts as swaps under the Commodity Exchange Act. The action, announced by Chairman Michael Selig, amends the regulatory definition of a swap to encompass event contracts, which would place prediction market products under the federal swap-regulation framework that the CEA reserves to the CFTC's exclusive jurisdiction. The scope of the classification covers sports, political, cultural, and weather-related contracts. A separate provision excludes casino-style gambling products and traditional sportsbook wagers from the swap definition, drawing a line between event contracts traded on a designated contract market and conventional gambling products. Selig said the aim is to remove 'any ambiguity regarding these contracts.' Coverage of the action differed on its precise procedural form — some sources described an interim final rule that takes effect on Federal Register publication with a 30-day comment period, others a proposed rulemaking — so the operative designation should be confirmed against the primary notice on cftc.gov.
The significance of the action lies in its target. The question of whether event contracts meet the statutory definition of a 'swap' is the exact question that has divided the federal circuits: the Third Circuit held that they are swaps (giving the CFTC exclusive jurisdiction and preempting state law), while the Ninth and Sixth Circuits held that they are not swaps (allowing state gambling regulation to apply). That circuit split is the basis for the cert petitions now pending at the Supreme Court. By issuing a rule that classifies event contracts as swaps, the CFTC is attempting to resolve by regulatory action the precise question that the courts are split on — and to resolve it in the direction that favors the platforms and the CFTC's own claim of exclusive jurisdiction. The regulatory classification is the CFTC placing its institutional weight behind one side of the legal argument at the most consequential possible moment.
Whether the rule actually settles the question is a separate and contested matter. Courts generally give deference to an agency's reasonable interpretation of a statute it administers, but the degree of deference has narrowed significantly in recent years following the Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo, which overturned the Chevron doctrine of broad deference to agency statutory interpretation. Under the post-Chevron framework, courts decide statutory meaning for themselves and give agency interpretations weight only to the extent they are persuasive. A CFTC rule declaring event contracts to be swaps does not bind the Supreme Court's independent reading of whether the CEA's swap definition actually reaches these contracts — the Sixth and Ninth Circuits have already concluded it does not, and a late-arriving agency rule asserting the opposite may be viewed as the agency attempting to manufacture the jurisdiction it is simultaneously litigating to defend. The rule strengthens the CFTC's and the platforms' position, but it does not eliminate the legal question.
The timing situates the rule in the middle of an intensely active legal and political moment. The Supreme Court amicus deadline passed on October 8, producing briefs from the NFL, 39 state attorneys general, 145 tribal governments and organizations, and the American Gaming Association, all urging the Court to take the case and rule against the platforms. The CFTC's rule, issued the following day, is the federal government's institutional counterweight to that wave of state and private opposition. It also arrives amid reporting on the political entanglements between the platforms and the current administration, which the rule's critics will cite as evidence that the CFTC is acting to protect politically connected companies rather than to interpret the statute neutrally. The rule's defenders will note that the CFTC has consistently asserted exclusive jurisdiction over event contracts since well before the current controversy, and that formalizing that position in a rule is a legitimate exercise of the agency's authority. Either way, the prediction market legal landscape now features a direct confrontation: a federal agency rule classifying the contracts as swaps, against two circuit court rulings holding they are not, with the Supreme Court poised to decide which interpretation governs.
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