Case 2:25-cv-00575-APG-BNW Document 237 Filed 11/24/25 Page 18 of 29
1 2 3 4 5 6 7 8 9
swap, it must be traded on an exchange. See 7 U.S.C. §§ 1a(47) (defining swap); 2(e) (making it “unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on, or subject to the rules of, a board of trade designated as a contract market under section 7 of this title”). And while the CFTC has stated that it will consider whether an instrument is traded on an exchange as a factor to distinguish consumer contracts from swaps, it is not the only factor the CFTC identified. Further Definition of “Swap,” “Security-Based Swap,” and “Security-Based Swap Agreement”; Mixed Swaps; Security-Based Swap Agreement Recordkeeping , 77 FR 48208-01, 48247 (Aug. 13, 2012). Further, Kalshi’s proposed distinction becomes self-fulfilling, circular, and inconsistent with the statutory text. Kalshi essentially argues that if contracts are not traded on an exchange, then they are not swaps that must be traded on an exchange. But the CEA states that all swaps must be traded on an exchange. Additionally, the CFTC has prohibited DCMs from listing contracts that involve gaming. 17 C.F.R. § 40.11(a)(1). By Kalshi’s logic, Kalshi’s gaming contracts should not count as swaps because the CFTC prohibited them from being traded on an exchange. The Board thus has met its burden to show that Kalshi is not likely to succeed in showing that Kalshi’s sports-related contracts are swaps because those contracts are based on the outcome of sports events or are based on things that take place during an event (such as a coin flip) but that are not events or contingencies themselves within the CEA’s meaning. Additionally, although a sports game might be inherently associated with a potential financial consequence (people pay to attend), discrete moments or acts during a sports game like a coin flip or whether there is a fumble are not inherently associated with potential financial, economic, or commercial consequences within the CEA’s meaning.
10 11 12 13 14 15 16 17 18 19 20 21 22 23
18
Made with FlippingBook - Online catalogs