(explaining that CFTC was enacting § 40.11(a)(1) “[p]ursuant to [the authority granted in 7 U.S.C. § 7a- 2(c)(5)(C]” to determine whether certain contracts are contrary to the public interest); 76 Fed. Reg. 44776, 44786 (July 27, 2011) (same). As such, the CFTC’s implementing regulations also expressly prohibit event contracts involving “gaming” from being listed for trading or accepted for clearing on or through a registered entity. Specifically, 17 C.F.R. § 40.11(a)(1) provides, in relevant part: Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following: (1) An agreement, contract, transaction, or swap based upon an excluded commodity . . . that involves, relates to, or references . . . gaming . . . . (Emphasis added); see also 7 U.S.C. § 7a-2(c)(5)(C). In KalshiEX LLC , the United States District Court for the District of Columbia adopted KalshiEX LLC’s (“Kalshi”) definition of “gaming,” as the term is used in the CEA, to mean “playing games” and “playing games for stakes.” KalshiEX LLC v. CFTC , No. 23-3257, 2024 WL 4164694, *8 (D.D.C. Sept. 12, 2024). Under the definition advocated by Kalshi and adopted by the District Court, Sports Contracts clearly involve gaming. As the District Court explained, Congress specifically intended to prohibit sports betting. Id. at *12. According to the CEA’s legislative history, Senator Lincoln (the drafter of the 2010 amendments to the CEA) remarked during “colloquy on the Senate floor . . . that the provision ultimately enacted as Section 5(c)(5)(C) of the CEA was intended to ‘prevent gambling through futures markets’ and restrict ‘event contract[s] around sporting events such as the Super Bowl.’” Id. In that colloquy, Senator Lincoln stated that the intent of the 2010 Dodd-Frank amendments to the CEA was “to protect the public interest from gaming contracts.” 156 Cong. Rec. S5906 (2010). Senator Feinstein asked if the intent of the legislation was to empower the CFTC “to determine that a contract is a gaming contract if the predominant use of the contract is speculative as opposed to a hedging or economic use.” Id. Senator Lincoln responded: That is our intent . . . to prevent derivatives contracts that are contrary to the public interest because they exist predominantly to enable gambling through supposed “event contracts.” It would be quite easy to construct an “event contract” around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament. These types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling. Id. at S5906-7 (emphasis added). The District Court in KalshiEX distinguished the Congressional control contracts at issue in that case because “elections bear little relation to ‘sporting events.’” KalshiEX LLC , 2024 WL 4164694, at *9. The District Court concluded that “event contracts related to any of the sporting events the senator mentioned on the floor could implicate the gaming category,” and “[a]ll these [sports] events can easily quality standards at the level that is ‘requisite’ that is, not lower or higher than is necessary—to protect the public health with an adequate margin of safety, fits comfortably within the scope of discretion permitted by our precedent.”); Nat’l Broad. Co. v. United States , 319 U.S. 190, 225-26 (1943) (upholding delegation to FCC to regulate broadcast licensing in the public interest); N.Y. Cent. Sec. Corp. v. United States , 287 U.S. 12, 24-25 (1932) (“It is a mistaken assumption that this [delegation of authority to regulate railroads in the public interest] is a mere general reference to public welfare without any standard to guide determinations. The purpose of the [Interstate Commerce] Act, the requirements it imposes, and the context of the provision in question show the contrary.”)
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