Case 2:25-cv-00978-APG-BNW Document 105 Filed 10/14/25 Page 19 of 27
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swaps contracts in excluded commodities are contrary to the public interest. 7 U.S.C. § 7a- 2(c)(5)(C)(i). Among the types of contracts that Congress stated can be subject to this public interest review are contracts that “involve . . . gaming.” Id. § 7a-2(c)(5)(C)(i)(V). And Congress set forth in the CEA that if the CFTC determines that a contract is contrary to the public interest under this rule, then that contract may not be “listed or made available for clearing or trading on or through a registered entity.” Id. § 7a-2(c)(5)(C)(ii); see also 7 U.S.C. § 7a-2(c)(5)(B) (“The Commission shall approve a new contract or other instrument unless the Commission finds that the new contract or other instrument would violate this chapter (including regulations).”). The CFTC made that public interest determination on a blanket basis when it promulgated 17 C.F.R. § 40.11(a), which prohibits DCMs from listing a swap based on an excluded commodity that “involves, relates to, or references . . . gaming,” or “an activity that is similar to” gaming. And it provided a mechanism for the CFTC to review and delist a self-certified contract that runs afoul of that prohibition. 14 The CFTC’s decision to prohibit DCMs from listing gaming contracts is consistent with congressional intent to “prevent gambling through futures markets.” 156 Cong. Rec. S5902-01, S5906 (July 15, 2010) (statement of Sen. Lincoln). Legislators commented specifically on sports 14 As part of the self-certification process, Crypto had to certify its contracts complied with the CEA and CFTC regulations. 17 C.F.R. § 40.2(a)(3)(iv). Although Crypto’s certification addressed some of the CFTC’s Core Principles, it did not address Core Principle 1. ECF No. 15- 3 at 17 (deeming it “Not applicable (designation granted)”). Core Principle 1 requires DCMs to comply with “[a]ny requirement that the Commission may impose by rule or regulation pursuant to section 8a(5) of the Act.” 7 C.F.R. § 38.100(a)(2). Section 8a(5) of the CEA grants the CFTC the authority “to make and promulgate such rules and regulations as, in the judgment of the Commission, are reasonably necessary to effectuate any of the provisions or to accomplish any of the purposes of this chapter.” 7 U.S.C. § 12a(5); First Commodity Corp. of Bos. v. Commodity Futures Trading Comm’n , 676 F.2d 1, 5 (1st Cir. 1982). Crypto did not explain in its self- certification how its event contracts based on the outcome of sporting events comply with the CFTC’s regulation in 17 C.F.R. § 40.11(a) that prohibits DCMs from listing contracts that involve, relate to, or reference gaming.
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