Case 1:25-cv-14723 Document 10-1 Filed 08/19/25 Page 13 of 34 PageID: 85
An exchange may submit new contracts to the CFTC for approval prior to listing;
alternatively, it may self-certify the contracts as complying with CFTC requirements. 7 U.S.C.
§ 7a-2(c)(1), (4)(A); 17 C.F.R. §§ 40.2(a), 40.3(a), 40.11(c). Generally, the CFTC “shall
approve a new contract” unless the CFTC finds that it would violate the CEA or CFTC
regulations. 7 U.S.C. § 7a-2(c)(5)(B). The CEA contains a special rule relating to CFTC review
and approval of event contracts, which was added by the Dodd-Frank Act of 2010. Pub. L.
No. 111-203, § 745(b), 124 Stat. 1376, 1735-36. With respect to event contracts specifically, the
CFTC may prohibit event contracts in specific categories if it determines them to be “contrary to
the public interest.” 7 U.S.C. § 7a-2(c)(5)(C)(i); 17 C.F.R. § 40.11(a)(1)-(2). If an exchange
self-certifies a new contract, the CFTC may initiate a review of that contract within 10 business
days of receiving notice of it. See 7 U.S.C. § 7a-2(c)(2); see also 17 C.F.R. § 40.11(c)
(permitting the CFTC to select a 90-day review period for event contracts). If the CFTC does
not act within that window, the new contract is deemed approved and becomes effective. See
7 U.S.C. § 7a-2(c)(2).
Kalshi self-certified and began listing sports-related event contracts on January 24, 2025.
KalshiEx , 2025 WL 1218313, at *2. Because the CFTC declined to review or prohibit Kalshi’s
sports-related event contracts, id. , they were deemed approved and became effective upon the
expiration of the 10-day probationary period under 7 U.S.C. § 7a-2(c)(2) and are legal under
federal law.
Fundamental differences in how contract markets and sportsbooks operate mean they are
susceptible to different forms of risk to participants. Contract markets leverage the power and
rigor of financial markets to provide traders with liquidity and transparency, and prices are set by
market participants. Customers can manage risk by adjusting or exiting their positions up until
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