The CFTC submitted two rule proposals on September 29 to formally classify event contracts as swaps under the Commodity Exchange Act. This move directly challenges several states, including Arizona, Nevada, and Massachusetts, which argue these products fall under state gambling laws rather than federal derivatives regulation. The proposals aim to establish a clear framework where legitimate event contracts receive CFTC oversight while casino-style gambling products are excluded. The CFTC had already taken steps in June with a notice of proposed rulemaking to amend Regulation 40.11, and in May with no-action relief for fully collateralized event contracts. The comment period and interagency review process are expected to stretch into 2027, while state-level litigation continues.
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