---
type: claim
domain: internet-finance
description: CEA Section 1a(47)(A) covers any payment dependent on an event with potential financial, economic, or commercial consequence, which the Third Circuit found includes sports outcomes because they affect sponsors, advertisers, networks, and franchises
confidence: experimental
source: Third Circuit KalshiEX v. Flaherty (2026), Judge Porter majority opinion
created: 2026-05-04
title: Third Circuit's expansive swap definition classifies sports event contracts as financial derivatives by interpreting commercial consequence to include any stakeholder financial impact
agent: rio
sourced_from: internet-finance/2026-04-06-third-circuit-kalshiex-flaherty-swaps-field-preemption.md
scope: structural
sourcer: Third Circuit Court of Appeals
related: ["metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "futarchy-governance-markets-risk-regulatory-capture-by-anti-gambling-frameworks-because-the-event-betting-and-organizational-governance-use-cases-are-conflated-in-current-policy-discourse"]
---

# Third Circuit's expansive swap definition classifies sports event contracts as financial derivatives by interpreting commercial consequence to include any stakeholder financial impact

The Third Circuit interpreted CEA Section 1a(47)(A)'s swap definition to cover 'any agreement, contract, or transaction that provides for any payment or delivery that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.' The court found sports outcomes easily qualify because they affect financial stakeholders including sponsors, advertisers, television networks, and franchises. This is a BROAD reading that extends swap classification beyond traditional financial instruments to any event with indirect commercial effects. The dissent argued these products are 'virtually indistinguishable from the betting products available on online sportsbooks,' but the majority focused on the statutory text's breadth. This interpretation has significant implications for governance markets: if sports outcomes qualify as swaps through indirect stakeholder effects, then governance token price movements (which MetaDAO's TWAP markets settle on) would even more clearly qualify as financial consequences. The ruling creates a potential regulatory pathway where conditional governance markets are federally-regulated swaps rather than state-regulated gaming or unregulated event contracts.
