CFTC Moves to Define Event Contracts as Swaps
The CFTC has proposed a new rule change that would see culture, politics, sports, and weather-related event contracts defined as swaps.
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The Commodity Futures Trading Commission (CFTC) has proposed a rule change on 9 October 2026 that would define the term “swap” to include event contracts based on sports, culture, politics, and weather. The agency published a Notice of Proposed Rulemaking (NPRM) on the same day, saying the change is meant to provide additional clarity.
The CFTC describes event contracts as financial instruments commonly known in the trade as swaps. Per the new proposal, any ambiguity left on how they’re classified will be resolved.
Statement from the Chairman
Chairman Michael S. Selig said that Americans rely on such products for several purposes. “Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events,” he said in a statement. “These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction.”
Event contracts pay out based on whether a specified future event occurs. It can be a sports game result, an election outcome, or even a temperature reading for weather-related events. The CFTC governs US derivatives markets, and has authority over swaps.
Why the Classification Matters
The definition of swaps affects the rules that apply to event contract platforms, and which regulator oversees them. By stating that these contracts are swaps in its exclusive jurisdiction, the CFTC takes a clear position on a market that has grown significantly in the past few years.
State-level disputes over sports event contracts are currently a major legal battle between prediction market operators such as Kalshi and state gambling regulators. The latter argue that these contracts are unlicensed sports betting.
What Happens Next
The proposal doesn’t take effect immediately. As an NPRM, it’s a first step in the rulemaking process. The public has a chance to weigh in before the CFTC decides whether it finalizes the rule.
Comments on the proposal must be submitted in writing through Regulations.gov. They must be received within 30 days of the NPRM’s publication in the Federal Register. After the comment period closes, the CFTC will review all submissions before deciding on what happens next.
Exchanges and trading platforms that list event contracts, along with state regulators, are likely among the first to weigh in. Observers will be watching closely to see whether a rule keeps the proposed language, and how both courts and regulators respond to the proposed change.
For more on how prediction markets work and where they’re available, check our prediction markets hub.
