CFTC’s 267-Page Defense of Sports Event Contracts Relies on Dodd-Frank Interpretation

Posted on: June 11, 2026, 02:20h. 

Last updated on: June 11, 2026, 02:20h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.
  • The CFTC says a 2010 federal bill gives it the regulatory authority of sports event contracts
  • The agency argues that the Dodd-Frank Act opted not to prohibit sports as swaps

The United States Commodity Futures Trading Commission (CFTC) has unveiled a proposed amendment to “modernize” Rule 40.11, the longstanding federal regulation that prevents prediction markets from offering trading on contracts tied to war, terrorism, assassination, and gaming.

CFTC proposal Special Rule prediction markets
The CFTC wants to rework the Commodity Exchange Act’s so-called “Special Rule” that limits what sort of event contracts can be traded on prediction markets. The proposals will likely be a feisty legal challenge from the states. (Image: Shutterstock)

The CFTC has unveiled a 267-page overhaul of Rule 40.11, the so-called “Special Rule,” that not only seeks to modernize the agency’s regulations but also to reinforce its statutory authority of innovative products on prediction markets. The proposed changes are designed to deliver regulatory clarity for determining when an event contract involves an enumerated activity.

Specifically, the draft interprets war to include all belligerent and military activities, not only those formally declared by a government. Terrorism includes physical and non-physical attacks, including cyberattacks, while assassination includes any intentional killing of a human being.

Prediction markets are, and will continue to be, barred from offering trading on events with any of those components.

CFTC Makes Gaming Argument

Most importantly, the CFTC proposes vast amendments in identifying categories of “gaming-related contracts.”

The CFTC proposes excluding certain sports event contracts that pose heightened public policy risks, like player-injury, officiating, and pre-college athletics. The recommendations also suggest excluding “casino-style games of chance” from prediction markets, meaning the outcome of a roulette spin could not be traded.

However, the CFTC isn’t backing down on its defense of allowing prediction markets to otherwise offer sports event trading. The agency under the second Trump administration has moved to strengthen the CFTC’s oversight of sports events.

In its proposal, the CFTC argues that interpretations of the 2010 Dodd-Frank Act amended the Commodity Exchange Act to classify sports event contracts as swaps.

The CFTC argues in its proposal that Congress was aware in 2010 that “sporting events such as the Super Bowl, the Kentucky Derby, and the Masters golf tournament could potentially be submitted under the CEA.” The CFTC now says that the Special Rule “chose not to prohibit event contracts involving those sorts of events.”

Instead, the Special Rule confirms CFTC’s jurisdiction over event contracts and sets out a process by which the CFTC ‘may’ find such event contracts to be contrary to the public interest. Notably, the statute does not authorize the Commission to impose a per se prohibition on the listing of such event contracts independent of a public interest determination,” the filing details.

The CFTC says the Dodd-Frank Act provides the agency with the legal footing to allow trading on sports events that have a “commercial utility” or “informational value.”

SCOTUS Decision

The CFTC’s argument regarding sports events will be challenged by state attorneys general, gaming regulatory commissions, and state lawmakers.

Dozens of states that have passed laws to regulate sports gambling say the CFTC is overstepping its legal authority and allowing companies to conduct sports betting in their jurisdictions without a license or being subjected to its regulations. States that don’t want sports betting say the CFTC is forcing such gambling on their constituents.

In 2018, the landmark Supreme Court decision ruled that the Professional and Amateur Sports Protection Act (PASPA) violated anti-commandeering interpretations of the US Constitution by compelling 49 states not to engage in single-game sports betting while allowing one (Nevada) to do so.

“Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own,” the SCOTUS majority wrote in May 2018.

“Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA regulates state governments’ regulation of their citizens. The Constitution gives Congress no such power,” the ruling concluded.