U.S. CFTC moves to fold event contracts into swaps regulations as legal fight rages
The U.S. Commodity Futures Trading Commission (CFTC) is moving to classify event contracts, such as those on prediction markets, as 'swaps' to bring them under federal regulatory oversight. This effort faces legal challenges from states that argue they hold jurisdiction over such betting activities.
Why it matters
The outcome of this regulatory battle will determine the future of the burgeoning prediction market industry and the extent of federal versus state control over speculative financial products.
The CFTC is trying to define the kind of sports wagering that are not swaps — contractual exchanges between parties that falls into the agency's federal jurisdiction — while maintaining that event contracts still fit the definition of swaps under the law, and as a result belong in CFTC oversight. Casino-style gambling will be held outside that swap definition, according to the interim final rule issued by the agency. And event contracts belong well within that swaps definition, the CFTC proposed in a related rule .
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