Share 
This image was created entirely by AI with guidance from our editorial team.
The Commodity Futures Trading Commission issued two rulemakings on Oct. 9 aimed at clarifying its authority over sports event contracts while excluding qualifying sportsbook and casino wagers from its definition of a swap.
According to an Oct. 26 client alert from Brownstein, the actions respond to conflicting federal appeals court decisions about whether sports event contracts fall under the Commodity Exchange Act. The alert reports no West Virginia-specific change to gambling rules or product access.
Sportsbook exclusion takes effect immediately
The CFTC’s Interim Final Rule excludes casino-style gambling products from the regulatory definition of a swap, including qualifying wagers placed with sportsbooks and casinos. Brownstein reports that the rule is effective immediately but can be amended.
Transactions must meet both of these conditions to qualify for the exclusion:
- Provider Test: The provider must be licensed or otherwise authorized by a state or tribal gaming commission, or a similar agency.
- Product Test: The transaction must not be inherently tradable on a board of trade, organized exchange or similar market.
The distinction addresses both who offers a product and how that product operates. A gaming license alone does not satisfy both tests.
In language quoted by Brownstein, the CFTC said the action is intended to “clarify the boundaries between the Commission’s jurisdiction over the derivatives markets and State and Tribal jurisdiction over casino-style gambling.”
Proposed rule would explicitly include event contracts
The separate Notice of Proposed Rulemaking would revise the swap definition in 17 C.F.R. § 1.3 to include event contracts based on sports, politics, cultural events and weather. Unlike the interim final rule, this proposal has not been adopted.
The courts have reached different conclusions about sports contracts. The Third Circuit held that sports event contracts traded on a CFTC-licensed designated contract market fell within the law’s swap definition.
The Sixth Circuit, in Kalshi v. Schuler, found that potential downstream financial effects of sports events were too remote to make those contracts swaps. The Ninth Circuit, in KalshiEx, LLC v. Assad, found that Rule 40.11 barred gaming-related contracts from designated contract markets and deemed Kalshi’s sports contracts virtually indistinguishable from sports bets.
The CFTC says its proposed changes would bolster its position that it has authority to regulate sports contracts. That position remains contested.
Court review and public comments remain pending
Brownstein reports pending petitions seeking Supreme Court review and identifies Nov. 19 as the proposed rule’s comment deadline.
The key unresolved questions are whether the proposal will be adopted and how the courts will address the competing interpretations. The alert does not establish a change in the availability of prediction-market products or licensed gambling offerings in West Virginia.
More from playwv.com – Prediction market firms push back on CFTC affiliate trading proposal – CFTC settlement bars former White House worker from prediction markets after Kalshi profits – State AGs Challenge CFTC Over Prediction Market Rules and What It Could Mean for Gambling Oversight
—
Source: As reported by Brownstein.
