On October 9, 2026, the Commodity Futures Trading Commission published proposed rule RIN 3038-AF82 to expressly include event contracts in the definition of a swap. The proposal names contracts based on sports, politics, cultural and weather events. It would add those categories to paragraph 1.3(2)(i)(G) of the agency’s regulations.
The change is a jurisdictional rule, not a new product approval. The CFTC says event contracts can already fall within four parts of the Commodity Exchange Act’s swap definition. Those cover transactions whose payments depend on an event with a potential financial, economic or commercial consequence, commodity options, instruments commonly known to the trade as swaps, and combinations or options on covered transactions.
The agency’s announcement says the proposal is intended to resolve ambiguity about these contracts. Chairman Michael S. Selig said Americans use them to hedge, speculate and provide information about future outcomes. He called them commodity derivatives within the CFTC’s exclusive jurisdiction.
What the rule would change
The proposed text is short. It revises the list of swap inclusions in 17 CFR Part 1 and adds: “Event contracts, including those based on sports-, politics-, cultural, and weather-related events.” The list is non-exhaustive. The proposal says an event contract may instead be structured as a futures contract, which the statute excludes from the swap definition. A contract may also be a security-based swap or another instrument under Securities and Exchange Commission jurisdiction. The proposed addition would not cover casino-style gambling products, which the CFTC says are not swaps.
For retail users, the classification determines where a covered contract can trade. The proposal says retail participants may trade swaps only on a designated contract market. A swap execution facility may list event-contract swaps, but its market is limited to eligible contract participants, a category that generally covers institutional investors.
A designated contract market listing these contracts must follow the existing core principles. Those include listing contracts that are not readily susceptible to manipulation, preventing market disruption and protecting markets and their participants. The CFTC does not propose new reporting, recordkeeping or third-party disclosure duties. It also says the rule would not alter existing trading rules, exchange requirements or information-distribution duties.
The immediate practical effect for operators would be greater certainty about which compliance framework applies. Exchanges already configured as designated contract markets would continue under federal derivatives rules. New entrants could face the fixed costs of that infrastructure. The CFTC acknowledges that the result could favor incumbents over state-licensed platforms and reduce competitive pressure on fees, service quality and product variety at the margin.
A growing market and conflicting rulings
The agency supports the proposal with its own market data. As of September 1, 2026, at least seven CFTC-registered designated contract markets offered sports-related event contracts to U.S. users. More than fifteen designated contract market applications had been filed since 2025, and many applicants said they planned to offer products that could qualify as event contracts.
The CFTC estimates that August 2026 monthly event-contract volume was about $1.5 billion across reporting designated contract markets. Sports accounted for approximately $1.2 billion. Politics-related products, including election contracts, accounted for approximately $11 million, while weather contracts accounted for approximately $4 million.
The rule follows conflicting federal appellate decisions. The proposal says three federal appeals courts have considered whether sports-outcome contracts are swaps under one clause of the Commodity Exchange Act. A divided Third Circuit panel held in April 2026 that sports-related event contracts traded on a CFTC-licensed market fit the swap definition. The Ninth Circuit reached the opposite preliminary conclusion in August, and the Sixth Circuit held in September that sports events were not inherently associated with a financial, economic or commercial consequence.
State action adds another layer. Minnesota enacted a criminal prohibition covering the operation or facilitation of prediction markets. Arizona filed a twenty-count criminal information against a designated contract market for offering sports and election contracts. New York sought an order to stop a market from offering sports, cultural, election and other event contracts in the state. State courts in Michigan, Washington and Nevada also ordered geofencing of sports-related contracts.
The proposed rule responds by defining the products at the federal level. The CFTC says federal law exclusively governs swaps traded or executed on a designated contract market. Finalizing the definition would strengthen that position, but the proposal acknowledges that ongoing state efforts may limit the benefit of added certainty.
What users and operators should watch
The proposal does not claim that federal supervision removes trading risk. The CFTC warns that a clearer federal label could be interpreted by retail traders as a safety signal. Users could increase exposure without better disclosures or education about contracts tied to sports, politics, culture or weather.
The agency also points to trading features associated with addictive behavior. These include outcomes arriving at unpredictable intervals, perceived skill, near misses and loss chasing. The proposal says high-frequency trading, disproportionate allocation of personal resources and difficulty disengaging can produce financial harm.
Operators now have a defined rule text against which to assess listings, venue registration and access controls. Retail users can check whether a covered contract trades on a CFTC-designated contract market and whether the venue applies the agency’s core principles. Neither check guarantees a profitable or suitable trade.
Comments are due within 30 days after the proposal appears in the Federal Register. The final deadline is therefore still pending publication. The unresolved question is whether a final rule will settle the federal-state jurisdiction dispute or become the next subject of it.
