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Sports prediction contracts would be explicitly recognized as swaps under an Oct. 9 proposal from the Commodity Futures Trading Commission (CFTC).
The agency issued a rule excluding qualifying casino games and sportsbook wagers from that financial product category.
Michigan has secured agreements or court orders restricting sports-event contracts offered through Coinbase, Robinhood, and Kalshi. The proposed classification is not yet final and does not reopen sports contracts restricted by existing agreements or court orders.
Michigan agreements set October deadlines for sports contracts
The Michigan Gaming Control Board (MGCB) announced that Coinbase had agreed to halt sports event contracts in the state. Its deadline was 12 a.m. Eastern on Oct. 10.
Robinhood’s agreement required it to stop offering new sports contracts by the end of Sept. 9 and close positions still open by Oct. 9. A preliminary injunction against Kalshi also barred the company from offering, listing, or facilitating sports event contracts for anyone located in Michigan.
Both company agreements preserve the parties’ legal arguments. They do not settle whether Michigan can regulate federally registered event contracts as gambling.
Proposed classification extends beyond sporting events
Sports outcomes, politics, weather, and cultural events all fall within the proposal’s scope. The amendment would expressly identify these event contracts as swaps, a class of financial instruments regulated by the CFTC. Swap payments can depend on whether a specified event occurs or on changes in an asset’s value.
Chairman Michael S. Selig described event contracts as commodity derivatives, asserting that the Commodity Exchange Act places them solely under CFTC authority.
A sports contract might ask whether the Detroit Lions will win an upcoming game. Traders buy the “yes” or “no” side, with these binary event contracts typically settling at $1 for the correct side and zero for the other.
At a purchase price of 65 cents, a winning $1 contract yields 35 cents in profit before fees. A losing position has no settlement value, costing the trader the full 65-cent purchase price.
Customers may also sell contracts before settlement at the available market price. An early sale can produce a profit or loss, depending on how the price has changed and any trading fees.
An exchange matches orders from traders, so contract prices emerge from their bids and offers. A sportsbook sets the odds at which it accepts a customer’s bet.
Separate rule excludes licensed gambling wagers
The CFTC’s interim final rule excludes qualifying wagers on sports, table games, and slots from the swap category. The agency says the rule puts its established treatment of casino-style gambling into writing.
To qualify, a wager must be offered under a state or tribal gambling authorization, within the operator’s permitted scope, and regulated as gambling. Transactions on an exchange or another market involving negotiated trades do not receive this exclusion.
Publication in the Federal Register triggers the rule’s effective date. Michigan’s licensed sportsbooks and online casinos continue operating under state gambling requirements.
Licensed Michigan sportsbooks remain available
Michigan residents can still place sports wagers through state-licensed sportsbooks. The MGCB’s authorized provider list identifies approved platforms, their casino or tribal partners and their official betting websites.
CFTC registration does not give an app a Michigan sports betting license. Customers should check the state’s list before assuming that a financial trading app is authorized to offer sports wagering in Michigan.
Coinbase and Robinhood customers with questions about closed sports positions should review their account notices and contact the platform’s support team.
