CFTC Seeks Public Comment on Notice of Proposed Rulemaking Concerning the Inclusion of Certain Event Contracts in the Definition of Swap

Key dates

2026-10-09

CFTC announced publication of the NPRM concerning inclusion of certain event contracts in the definition of swap and identified a 30-day comment period beginning on Federal Register publication.

Suggested considerations

• Compliance teams may wish to inventory event contracts by underlying event, settlement structure, customer type, and current legal classification, including whether each product is a binary option, another swap, a future, a security-based swap, or a casino-style gambling product.
• Potential operators, DCMs, SEFs, registrants, trade associations, and affected customers should consider submitting written comments through Regulations.gov within 30 days after the NPRM is published in the Federal Register; the Federal Register publication date and resulting calendar deadline should be monitored because the CFTC release does not specify either date.
• Firms may wish to assess whether current exchange, venue, customer-eligibility, market-surveillance, anti-manipulation, product-certification, disclosure, margin, reporting, and recordkeeping controls would support treatment of relevant contracts as swaps under existing CFTC requirements.
• Operators currently relying on state licenses may wish to evaluate the potential need for DCM or SEF arrangements, CFTC registration, federal compliance infrastructure, and transitional management of overlapping state and federal obligations if the rule is finalized.
• DCMs and SEFs may wish to review product-listing governance against CEA section 5c(c)(5)(C), applicable core principles, and 17 CFR 40.2(c), including whether particular contracts are readily susceptible to manipulation or involve gaming or other activity contrary to the public interest.
• Legal and tax teams may wish to keep CEA classification separate from federal tax and information-reporting analysis, which the NPRM states will continue to depend on the Internal Revenue Code, Treasury regulations, and IRS guidance.
• Firms may wish to monitor the separate CFTC action concerning casino-style gambling products and assess how the two rulemakings interact for products near the boundary between event contracts and gambling wagers.

What changed

The NPRM, RIN 3038-AF82, would add proposed 17 CFR 1.3(Swap)(2)(i)(G): “Event contracts, including those based on sports-, politics-, cultural, and weather-related events.” The CFTC relies on several existing swap-definition provisions, including CEA section 1a(47)(A)(i), (ii), (iv), and (vi), covering options, transactions dependent on events with potential financial, economic, or commercial consequences, instruments commonly known as swaps, and combinations or permutations of covered instruments. If finalized, covered event contracts would be subject to the existing CFTC swaps framework, including applicable DCM, SEF, retail-swap, market-integrity, and anti-manipulation requirements; retail swaps would generally need to be traded on a DCM under CEA section 2(e), while SEF trading would b

Who is affected

• U.S. event-contract and prediction-market operators offering sports-, political-, cultural-, or weather-related contracts
• Designated contract markets listing or considering listing covered event contracts
• Swap execution facilities making covered event contracts available to trade
• Swap dealers, major swap participants, futures commission merchants, and other CFTC-registered entities involved in covered contracts
• Retail and eligible-contract-participant customers trading event contracts
• State-licensed operators whose products may transition from state regulatory frameworks into the federal CFTC swaps framework

Related regulations

• Commodity Exchange Act section 1a(47), 7 U.S.C. 1a(47)
• Commodity Exchange Act section 2(a)(1)(A), 7 U.S.C. 2(a)(1)(A)
• Commodity Exchange Act section 2(e), 7 U.S.C. 2(e)
• Commodity Exchange Act section 5c(c)(5)(C), 7 U.S.C. 7a-2(c)(5)(C)
• Commodity Exchange Act section 5, 7 U.S.C. 7
• Commodity Exchange Act section 5h, 7 U.S.C. 7b-3
• 17 CFR 1.3
• 17 CFR 40.2(c)
• Dodd-Frank Act section 712(d), 15 U.S.C. 8302(d)
• Dodd-Frank Act section 721(b), 15 U.S.C. 8321