Case 2:25-cv-00575-APG-BNW Document 237 Filed 11/24/25 Page 20 of 29
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Contractors, Inc. , 458 U.S. 564, 575 (1982). It is absurd to think that Congress intended for DCMs to turn into nationwide gambling venues on every topic under the sun to the exclusion of state regulation and with no comparable federal regulator 7 without ever mentioning that was the goal when Congress added swaps to the CEA in 2010. C. Kalshi has not shown a likelihood of success that excluded commodities fall within the CFTC’s exclusive jurisdiction under § 2(a). Kalshi argues that even if its contracts are not swaps, they are “excluded commodities” subject to the CFTC’s regulation. 8 The Board responds that excluded commodities also require 7 The CFTC has stated that “in the United States, gambling is overseen by state regulators with particular expertise, and governed by state gaming laws aimed at addressing particular risks and concerns associated with gambling. The Commission is not a gaming regulator . The CEA and Commission regulations are focused on regulating financial instruments and markets, and do not include provisions aimed at protecting against gambling-specific risks and concerns, including customer protection concerns inherent to gambling. Permitting event contracts involving gaming, as proposed to be defined, to trade on CFTC-regulated markets would in effect permit instruments commonly understood as bets or wagers on contests or games to avoid these legal regimes and protections. Gambling is a rapidly evolving field, and the Commission does not believe that it has the statutory mandate nor specialized experience appropriate to oversee it, or that Congress intended for the Commission to exercise its jurisdiction or expend its resources in this manner.” Event Contracts , 89 FR 48968-01, 48982-83 (June 10, 2024) (internal footnotes omitted, emphasis added). Although the CFTC made this statement in the context of a proposed rule that was never finalized, the CFTC’s statements express its view on its own expertise (or lack thereof) in this area. The importance of strict gaming regulation has been highlighted by the recent arrests of high-profile players and coaches related to illegal gambling allegations in professional baseball and basketball. See Two Current Major League Baseball Players Charged in Sports Betting and Money Laundering Conspiracy , https://www.justice.gov/usao-edny/pr/two-current-major-league-baseball-players-charged-sports- betting-and-money-laundering; 31 Defendants, Including Members and Associates of Organized Crime Families and National Basketball Association Coach Chauncey Billups, Charged in Schemes to Rig Illegal Poker Games , https://www.justice.gov/usao-edny/pr/31-defendants- including-members-and-associates-organized-crime-families-and-national. 8 Kalshi also asserts, without elaboration, that its contracts are “futures” or “options.” ECF No. 184 at 14. Section 2(a) does not use the word “futures” standing alone. Rather, it refers to “contracts of sale of a commodity for future delivery.” Kalshi does not analyze how its contracts fit this statutory language. As for options, the Ninth Circuit has indicated that “an option means the contract whereby the creator (or writer) of the option grants to the purchaser ‘the right, for a specified period of time, to either buy or sell the subject of the option at a predetermined price.’”
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