- The proposed rule defines gaming to capture professional sports, keeping sports contracts inside the term rather than outside it.
- A state gambling ban would not count as unlawful activity, because the contract settles on the game itself.
- Final scores, point differentials, win-loss results and season-long statistics weigh against a public interest ban on sports contracts.
- A tribal consultation section cites Indian gaming law, then asserts the agency’s exclusive jurisdiction over event contracts.
WASHINGTON – A state gambling ban would not make a sports event contract unlawful under the Commodity Futures Trading Commission’s proposed gaming rule. That reading reverses the standard the agency itself applied when it rejected Kalshi’s election contracts.
What The Proposal Counts As Gaming
The Commission’s proposed gaming rule, published June 12 in the Federal Register, would add a definition of gaming to Rule 40.11(b). It covers any activity that participants “typically engage in for purposes of recreation or to entertain others,” that “is governed by rules,” and that “includes measurable occurrences or outcomes that depend on the participants’ luck, skill, or athletic ability during the activity.”
The Commission wrote that the wording is meant to “also capture professional sports, which are commonly understood to be games.”
That cuts against the account Amanda Fischer gave the Indian Gaming Association’s “New Normal” webinar on Wednesday. Fischer, chief operating officer and policy director at Better Markets and a former chief of staff to SEC Chair Gary Gensler, told the webinar the agency was reinterpreting gaming so that sports betting and poker fall outside it.
On the definition, the proposal does the opposite. Sports stay inside. What drops out is state law, and it drops out at the step that decides which government writes the rules for online gambling sites for USA players.
Where State Law Drops Out Of The Analysis
Rule 40.11 reaches contracts that “involve” unlawful activity, terrorism, assassination, war or gaming. The Commission proposes to read “involve” as asking whether the occurrence that determines settlement happens inside one of those activities, not whether the trading itself is lawful somewhere.
Its earlier Kalshi order, the proposal notes, “asked whether the act of trading the event contract equated to an activity unlawful under State law.” The Commission now says that reasoning “was incorrect,” and that under the proposed reading those contracts “would not involve activity that is unlawful under Federal or State law.”
Applied to sports, the occurrence that determines settlement is the game. No state prohibits the game. A state statute barring the wager therefore never enters the unlawful-activity prong, which is the prong most state regulators and tribes have leaned on against prediction markets.
What Counts Against A Public Interest Ban
Contracts that clear that step still face a public interest analysis. The proposed rule text sets out six positive factors and six negative ones for contracts that involve gaming, an even split rather than a tilt either way.
Contracts settling on final scores, point differentials, win-loss results, tournament advancement, individual or team statistical performance and season-long metrics “would be factors against a finding that the event contracts are contrary to the public interest.”
The other five positive factors turn on process. They cover an individual’s aggregate statistics over a game, settlement data that is publicly reported or league-verified, and an established integrity framework with an integrity unit or comparable monitoring function. They also cover information-sharing arrangements with the league or, for college games, the National Collegiate Athletic Association, and the registered entity’s own surveillance and trading prohibitions.
The six negative factors run the other way. Three cover games that depend entirely on random chance, contracts that settle “solely by reference to the duration, severity, occurrence, or medical diagnosis” of a player’s injury, and contracts that settle solely on the judgment calls of referees, umpires or other officials. The other three cover contracts settling solely on a discrete action in a game, on a physical altercation between players, and on games played below the collegiate level.
Total trading volume across CFTC-registered prediction markets topped $25 billion in 2025, a small share of the roughly $31 trillion in notional value the Commission’s futures markets carried that year. Prediction markets now out-trade America’s sportsbooks on this year’s numbers, and states are arguing over how to tax them.
What The Proposal Says To Tribes
The document carries a section headed Indian Tribal Consultation. It states that the CFTC is not subject to Executive Order 13175, the tribal consultation order, though agencies outside its scope are “encouraged to comply.”
It acknowledges that the Indian Gaming Regulatory Act establishes a comprehensive federal framework for gaming on Indian lands, that the National Indian Gaming Commission administers it, and that Tribal-State compacts under section 11(d) govern Class III gaming.
It recognizes what gaming revenue does for tribal economic development. Then it closes the question in one sentence: “However, the Proposal involves event contracts traded as swaps or futures contracts, which are subject to the Commission’s exclusive jurisdiction.”
The section records that Commission staff has met with tribal governments and cites an April 30 comment from the Tohono O’odham Nation. The Commission invited Indian tribal governments to comment on any aspect of the proposal that may affect tribal governmental, economic or regulatory interests.
Separately, the proposed definition states that it “does not purport to interpret or displace any other federal or state statutory regime using the same or a related term,” a limit that leaves state and tribal definitions intact while removing their effect on what may be listed.
What Better Markets Filed
Better Markets asked the Commission to withdraw the proposal in a July 27 comment letter signed by Benjamin L. Schiffrin, its director of securities policy.
The letter argues the proposal misreads the legislative history of the Dodd-Frank provision known as the Special Rule, and notes that thousands of comments on the March advance notice objected to platforms operating “in contravention of state and tribal law.” It says the agency’s failure to engage them “creates infirmities under the Administrative Procedure Act.”
Fischer wrote the organization’s summary of those comments in May. The comment period closed July 27.