TheCorporateCounsel.net

In the month since I last wrote about prediction markets, the CFTC has proposed to further define the term “swap” to include event contracts, including those based on sports, politics, cultural, and weather-related events. The CFTC’s announcement of the proposal notes that “these contracts are financial instruments that are commonly known to the trade as swaps and proposes to resolve any ambiguity regarding these contracts.” At the same time, the CFTC issued an interim final rule codifying the agency’s longstanding position that gambling products (e.g., bingo games, lotteries and sportsbook and casino gambling), are excluded from the definition of “swap.” As the Mayer Brown Free writings + Perspectives blog notes:

Taken together, the Interim Final Rule and the [Notice of Proposed Rulemaking] represent a coordinated effort to distinguish state-regulated gambling from federally regulated event contracts and to remove the argument that treating event contracts as swaps would federalize every sportsbook wager. The releases are the latest in a series of CFTC actions affecting the prediction markets, including the June 2026 proposed rulemaking discussed in our prior post.

The CFTC itself is under scrutiny for its workforce reductions, with NPR recently reporting that the agency’s staffing is down 21% by the end of 2025. The article notes that the Government Accountability Office is currently investigating the staffing reduction at the CFTC, after Senator Elizabeth Warren called for an investigation into the agency’s staffing and reduction in enforcement actions back in July.

– Dave Lynn