CFTC moves to claim sports event contracts and leave casino games to the states
The US Commodity Futures Trading Commission published two rules on 9 October 2026 that pull in opposite directions. A proposed rule would define event contracts, including those on sports, politics, culture and weather, as swaps, which the CFTC says puts them within its exclusive jurisdiction. An interim final rule, effective on publication, says the opposite about sportsbook wagers and casino games: they are not swaps and stay outside the agency's remit. The move comes two weeks after a federal appeals court held that the best-known prediction market, Kalshi, had not shown its sports contracts were swaps at all.
Two rules, one line
The proposal, release 9310-26, would "expressly further" define the term swap to include event contracts, and the CFTC says it is resolving "any ambiguity" about them. "These products are commodity derivatives squarely within the CFTC's regulatory remit," Chairman Michael S. Selig said. The interim final rule, release 9309-26, codifies what the agency calls its longstanding position that "casino-style gambling products, including wagers placed on sportsbooks and casino games," are excluded from the definition. "Casino-style gambling products are not derivatives," Selig said.
Read together, the two rules draw the line by product rather than by subject. A contract on the outcome of a football match traded on a CFTC-licensed exchange would be a federal swap; a bet on the same match placed with a sportsbook would stay a state matter, and so would online casino games. Both rules take written comments through Regulations.gov for 30 days after they appear in the Federal Register. We had not found either in the Register by 12 October, so the deadline is not yet fixed.
Why the definition matters: the courts disagree
Kalshi, a CFTC-licensed exchange, began listing sports-event contracts in January 2025. States that license sportsbooks answered with cease-and-desist letters and fines, and Kalshi sued, arguing its contracts are swaps that federal law reserves to the CFTC. Three federal appeals courts have now ruled on preliminary requests, and they have not agreed.
| Court and date | Case | Are sports contracts swaps? | Outcome for Kalshi |
|---|---|---|---|
| Third Circuit, 6 Apr 2026 | KalshiEX v. Flaherty (New Jersey) | Yes, likely | Injunction against the state upheld; New Jersey has asked the Supreme Court to review |
| Ninth Circuit, 28 Aug 2026 | KalshiEX v. Assad | Likely not | Injunction dissolved |
| Sixth Circuit, 25 Sep 2026 | KalshiEX v. Schuler (Ohio, Tennessee) | Not shown | Relief denied in Ohio; Tennessee injunction vacated |
The Sixth Circuit's test is the one the CFTC now has to answer. According to Sheppard's summary, the court required an "inherent economic connection" between the event and a financial consequence, and found that effects on advertisers, sponsors or local businesses were not enough. The Third Circuit had read the same words in the Commodity Exchange Act more widely, and its majority pointed to the power Congress gave the CFTC and the SEC to "further define" swaps, according to Paul, Weiss. The proposed rule uses exactly that power.
What a rule can settle, and what it cannot
- It can settle the definition, if it survives comment and any challenge: a rule that names sports event contracts as swaps would answer the question the Sixth and Ninth Circuits decided against Kalshi.
- It does not settle preemption on its own. The Sixth Circuit also held that even if the contracts were swaps, Ohio's and Tennessee's gambling laws were not displaced. Sheppard's analysis is that a valid rule establishing swap status "would not, by itself, overcome" that separate holding.
- It does not end the cases. The appeals so far concern preliminary relief; the lawsuits continue, and New Jersey's petition, No. 26-299, was still pending at the Supreme Court on 1 October.
- It keeps casino games out. The interim rule leaves sportsbooks and casino-style games with the states that license them, so the federal claim covers exchange-traded event contracts only.
The states' side
Ohio has been the most outspoken. "These so-called prediction markets - which are really gambling, nothing more than that - they're just trying to get around the law," Governor Mike DeWine said on 2 October, promising enforcement after the Sixth Circuit ruling, the Statehouse News Bureau reported. The Ohio Casino Control Commission fined Kalshi $5 million in April for offering unlicensed sports gaming, and Ohio taxes licensed sports betting at 20%. The CFTC, for its part, has backed Kalshi as amicus in these cases and has sued Arizona, Connecticut and Illinois over their attempts to regulate prediction markets, according to Sheppard and Paul, Weiss respectively.
What it means for players
For anyone outside the United States, nothing changes. Inside it, the line the CFTC draws is the one to watch: online casino games and sportsbook bets remain a state question, legal only where a state licenses them, while sports contracts on a CFTC-licensed exchange may end up under federal rules that were written for financial markets, not for gambling. That difference matters in practice, because state sportsbook licences come with age checks, self-exclusion schemes and complaint routes set by the state, and the federal framework for event contracts was not designed around them. The proposal is open for comment, and the courts are not done; check the rules where you live before treating any of these products as one or the other.
Frequently asked questions
What did the CFTC do on 9 October 2026?
It published two rules. A proposed rule would define event contracts, including those on sports, politics, culture and weather, as swaps under the Commodity Exchange Act. An interim final rule says sportsbook wagers and casino games are not swaps.
Does this make online casino games federal?
No. The interim final rule does the opposite: it codifies that casino-style gambling products, including sportsbook wagers and casino games, are excluded from the swap definition, so they stay with the states.
When can people comment?
Both rules take written comments through Regulations.gov for 30 days after they are published in the Federal Register. We had not found either in the Register by 12 October 2026, so the exact deadline is not yet set.
Why do the courts disagree about Kalshi?
They read the swap definition differently. The Third Circuit found sports contracts likely are swaps; the Ninth and Sixth Circuits found Kalshi had not shown that, and the Sixth added that state gambling laws would apply even if they were.
Will the Supreme Court decide?
Possibly. New Jersey asked it to review the Third Circuit ruling, petition No. 26-299, which was pending as of 1 October 2026. Paul, Weiss wrote in April that the question would likely be settled there.
Sources
- CFTC - release 9310-26: proposed rule on event contracts in the swap definition (9 Oct 2026)
- CFTC - release 9309-26: interim final rule excluding casino-style gambling from the swap definition (9 Oct 2026)
- Sheppard (law firm) - Sixth Circuit narrows swap definition and rejects preemption (1 Oct 2026)
- Paul, Weiss (law firm) - a divided Third Circuit on sports-related event contracts (6 Apr 2026)
- Statehouse News Bureau - DeWine says Ohio will enforce state law against Kalshi (2 Oct 2026)
- 15M - Kalshi loses Ohio and Tennessee cases at the Sixth Circuit (28 Sep 2026)
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Read guide โThis article is independent editorial coverage and is not sponsored; no operator or supplier paid for inclusion. The facts were checked against the sources listed above on 12 October 2026, and rules, programmes and offers can change after that date. Nothing here is legal or betting advice. 18+ only; if you gamble, set your limits in advance.