Case 2:25-cv-00978-APG-BNW Document 105 Filed 10/14/25 Page 4 of 27
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occurrence, or contingency . . . that is . . . beyond the control of the parties to the relevant contract, agreement, or transaction; and . . . associated with a financial, commercial, or economic consequence”). Under this special rule, DCMs can still self-certify and immediately begin offering event contracts, or they can request the CFTC’s preapproval. KalshiEX LLC , 2024 WL 4164694, at *3; see also 17 C.F.R. §§ 40.2, 40.3. But under the special rule, Congress delegated to the CFTC to determine whether an agreement, contract, transaction, or swap in “excluded commodities that are based upon the occurrence, extent of an occurrence, or contingency” is contrary to the public interest. 7 U.S.C. § 7a-2(c)(5)(C)(i) (footnote omitted). Among the types of contracts Congress expressly included in this public interest review are contracts that “involve” terrorism, war, assassination, gaming, and “activity that is unlawful under any Federal or State law.” Id. Under the CEA, “[n]o agreement, contract, or transaction determined by the Commission to be contrary to the public interest under clause (i) may be listed or made available for clearing or trading on or through a registered entity.” 7 U.S.C § 7a-2(c)(5)(C)(ii). The CFTC subsequently conducted a public interest review under 7 U.S.C. § 7a- 2(c)(5)(C)(i) and adopted a regulation that prohibits DCMs from listing event contracts that involve, relate to, or reference gaming or an activity that is unlawful under any State or Federal law. Specifically, 17 C.F.R. § 40.11(a) states: (a) Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following:
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(1) An agreement, contract, transaction, or swap based upon an excluded commodity, as defined in Section 1a(19)(iv) of the Act, that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law; or (2) An agreement, contract, transaction, or swap based upon an excluded commodity, as defined in Section 1a(19)(iv) of the Act, which involves, relates to, or references an activity that is similar to an activity enumerated in § 40.11(a)(1) of this part, and that the
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