Case 2:25-cv-00978-APG-BNW Document 105 Filed 10/14/25 Page 5 of 27
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Commission determines, by rule or regulation, to be contrary to the public interest.
In addition to this general prohibition on the front end, the CFTC’s regulation provides a review process through which it can determine on the back end whether an event contract that was listed despite the prohibition involves a prohibited activity. Under 17 C.F.R. § 40.11(c), the CFTC
may determine, based upon a review of the terms or conditions of a submission under § 40.2 [(self-certification)] or § 40.3 [(preapproval)], that an agreement, contract, transaction, or swap based on an excluded commodity, as defined in Section 1a(19)(iv) of the Act, which may involve, relate to, or reference an activity enumerated in § 40.11(a)(1) or § 40.11(a)(2), be subject to a 90-day review.
The CFTC can approve or disapprove a contract following that review. 17 C.F.R. § 40.11(c)(2). When adopting this regulation, the CFTC acknowledged that “the term ‘gaming’ requires further clarification and that the term is not susceptible to easy definition.” Provisions Common to Registered Entities , 76 Fed. Reg. 44776, 44785 (July 27, 2011) (to be codified at 17 C.F.R. pt 40). The CFTC noted that it had “solicited public comments on the best approach for addressing the potential gaming aspects of some event contracts and the potential pre-emption of state laws.” Id. (simplified). The CFTC indicated that it would continue to consider comments it received “and may issue a future rulemaking concerning the appropriate regulatory treatment of event contracts, including those involving gaming.” Id. (simplified). But “[i]n the meantime, the Commission has determined to prohibit contracts based upon the activities enumerated in Section 745 of the Dodd-Frank Act[ 3 ] and to consider individual product submissions on a case-by-case basis under § 40.2 or § 40.3.” Id.
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3 Section 745 of the Dodd-Frank Wall Street Reform and Consumer Protection Act includes the special rule for event contracts in excluded commodities enumerated in 7 U.S.C. § 7a- 2(c)(5)(C)(i). PL 111-203, 124 Stat. 1376 (July 21, 2010).
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