CFTC rule formally excludes licensed sportsbooks from swap definition

An interim final rule issued by the Commodity Futures Trading Commission on October 9 draws a formal line between state- and tribal-licensed gambling products and the federal derivatives framework that governs swaps under the Commodity Exchange Act.

The rule, Release No. 9309-26, takes effect upon Federal Register publication. A 30-day comment period follows. It does not wait for that comment period to close — an interim final rule is in effect before responses arrive.

The mechanism is a two-part screen. A product must clear both a Provider Test, requiring a state or tribal licence, and a Product Test, requiring that the product not be exchange-traded. Sports wagers placed with licensed sportsbooks, casino table games, bingo, and lotteries can qualify. Exchange-listed event contracts cannot.

CFTC Chairman Michael Selig described the move as clarification rather than new policy: "Casino-style gambling products are not derivatives."

The same day, the agency published a separate proposal that would move the other direction — classifying certain exchange-traded event contracts tied to sports and politics as swaps. That proposal remains open for comment and is not in effect.