CFTC sends White House rules to define event contracts as swaps

The CFTC has move forward two sets of rules pertaining to event contracts for review by the White House Office of Information and Regulatory Affairs. The two proposals are not considered economically significant and have not been published yet. The proposals aim to clarify what types of event contracts fall under the authority of the federal oversight body, and to also make sure they are distinguished from casino-like gambling products. The first of the two proposals, or rule RIN 3038-AF82, will update the current definition of swaps to clearly include event contracts, such as “yes/no” trades on a prediction market. The rule is subject to public testimony before being finalized. The second rule, which is an interim final rule with the number RIN 3038-AF81, intends to add in a definition of “casino-style gambling products” to the definition of swaps. This rule, unlike the first, could take effect right after approval is granted and public comments are accepted. On September 22, the Division of Market Oversight of CFTC released an advisory related to mention markets, which are contracts that depend on the utterance of some pre-specified words by someone. The attempt of CFTC to define its authority through regulations resonates when states and courts Lawsuits against the Regulation of Prediction Markets are on the rise, awaiting a ruling of the Supreme Court on the subject.