Regulatory
CFTC Rule 40.11
Reviewed by iGaming Times editorial teamLast reviewed 16 October 2026
What is CFTC Rule 40.11?
CFTC Rule 40.11 is the Commodity Futures Trading Commission regulation, at 17 CFR 40.11, that bars registered entities from listing or clearing event contracts based on an excluded commodity that involve, relate to or reference terrorism, assassination, war, gaming, or an activity unlawful under state or federal law, as well as similar activities the Commission determines to be contrary to the public interest. It implements the special rule for event contracts that the Dodd-Frank Act added to the Commodity Exchange Act at section 5c(c)(5)(C).
Paragraph (c) lets the Commission start a 90-day review of a contract that may fall within those categories and ask the exchange to suspend trading in the meantime. The rule sits at the centre of the dispute over sports event contracts. On 12 June 2026 the CFTC published a proposal to rewrite it, replacing the categorical bar with a contract-by-contract public interest framework and a definition of gaming.
Key takeaways
- Rule 40.11 prohibits CFTC-registered exchanges from listing event contracts involving terrorism, assassination, war, gaming or unlawful activity.
- It also covers similar activities the CFTC determines to be contrary to the public interest, and allows a 90-day review with a request to suspend trading.
- Whether sports contracts involve gaming under Rule 40.11 is central to the legal fight between prediction markets and state regulators.
- In June 2026 the CFTC proposed replacing the categorical ban with a contract-by-contract public interest test; the comment period closed on 27 July 2026.
Why it matters
Rule 40.11 is the federal rule that decides whether an event contract touching sport, elections or other activities can trade on a CFTC-regulated exchange, so it determines the product range of every prediction market and every sportsbook partnering with one. Exchanges list contracts through self-certification, and Rule 40.11 is the main tool the CFTC has to stop or review them.
Its recent history shows the stakes. The CFTC used the public interest limb in 2023 to block congressional control contracts proposed by a designated contract market; a federal district court ruled against the agency in September 2024, and the CFTC dropped its appeal in May 2025. The agency then withdrew a 2024 proposal that would have defined gaming to include elections and sports, and in June 2026 proposed a new version. Under it, gaming would cover rule-governed recreational activities whose outcomes depend on luck, skill or athletic ability, which captures sports but not elections, and sports contracts would be assessed against factors such as reliance on objective, verifiable data, with contracts on injuries or officiating decisions disfavoured because of manipulation and insider risks.
On 9 October 2026 the CFTC proposed adding event contracts, including sports contracts, to the statutory definition of swap, and the same day issued an interim final rule excluding casino-style gambling products, such as sportsbook bets, from that definition. Neither text amends Rule 40.11, and the June 2026 proposal had not been finalised.
For operators, suppliers and data companies, the final text will shape which sports markets can be offered nationally under federal oversight while states litigate preemption. The prediction markets course explains the wider framework.
CFTC Rule 40.11 vs Self-Certification
| CFTC Rule 40.11 | Self-Certification |
|---|---|
| Rule 40.11 sets which categories of event contract an exchange may not list and gives the CFTC a 90-day review power over contracts that may fall within them. | Self-certification is the process by which an exchange lists a new contract by certifying to the CFTC that it complies with the law, without prior approval. |
Self-certification lets exchanges launch fast; Rule 40.11 is the brake. How broadly gaming is defined decides how often that brake can be applied to sports contracts.
The bottom line
CFTC Rule 40.11 bars exchanges from listing event contracts involving gaming, war, terrorism, assassination or unlawful activity, and lets the CFTC review contracts against the public interest. Its definition of gaming is the legal hinge of the sports event contract debate, and a June 2026 proposal would rewrite it.
Sources
- 17 CFR 40.11: Review of event contracts based upon certain excluded commodities - Legal Information Institute, Cornell Law School
- Prediction Markets; Public Interest Determinations (Federal Register, 12 June 2026) - Commodity Futures Trading Commission, via GovInfo
- 10 Takeaways from the CFTC Event Contracts Proposed Rulemaking - WilmerHale
- CFTC drops appeal in Kalshi election betting case - Yogonet
- CFTC Seeks Public Comment on Proposed Rule Concerning the Inclusion of Certain Event Contracts in the Definition of Swap (Release 9310-26) - Commodity Futures Trading Commission
- CFTC Issues Interim Final Rule Excluding Certain Activity from the Definition of Swap (Release 9309-26) - Commodity Futures Trading Commission
Frequently asked questions
What is CFTC Rule 40.11?
CFTC Rule 40.11, at 17 CFR 40.11, is a Commodity Futures Trading Commission regulation that prohibits registered entities from listing or clearing event contracts that involve, relate to or reference terrorism, assassination, war, gaming or activity unlawful under state or federal law. It also covers similar activities the CFTC finds contrary to the public interest, and gives the CFTC a 90-day review procedure.
Does Rule 40.11 ban sports event contracts?
That is the core of the dispute. Rule 40.11 lists gaming as a prohibited category, and states argue sports contracts are gaming. Exchanges have nonetheless self-certified sports contracts, and the CFTC has not used Rule 40.11 to remove them. The CFTC's June 2026 proposal would treat sports as gaming but assess each contract against public interest factors rather than banning the category outright.
What is the 90-day review under Rule 40.11?
Under paragraph (c), the CFTC can begin a review of an event contract that may involve one of the listed activities. During the review it will ask the exchange to suspend listing or trading of the contract. The Commission must then issue an order approving or disapproving the contract within 90 days of starting the review, or by the end of any extended period agreed with or requested by the exchange.
What did the CFTC propose for Rule 40.11 in 2026?
On 12 June 2026 the CFTC published a proposed rule titled Prediction Markets; Public Interest Determinations. It would replace the categorical prohibition with a three-step inquiry into whether a contract is an event contract, whether it involves a listed activity, and whether it is contrary to the public interest. It also proposes a definition of gaming that covers sports but excludes elections. Comments closed on 27 July 2026.