Case 2:25-cv-00575-APG-BNW Document 237 Filed 11/24/25 Page 13 of 29
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economic, or commercial consequence. This means that the event or contingency itself has some potential financial, economic, or commercial consequence without looking at externalities like potential downstream financial consequences such as parties extrinsic to the event betting on it. And it does not include consumer transactions that have not historically been known to be swaps, such as sports wagers. My interpretation is supported by the surrounding statutory text, legislative context, the CFTC’s post-enactment guidance, and federalism principles. The other subparts of the “swap” definition in § 1a(47)(A) refer almost exclusively to financial measures, indices, or instruments. Subpart (i) refers to a transaction that is “for the purchase or sale, or based on the value, of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind.” Subpart (iii) similarly refers to the “exchange . . . of 1 or more payments based on the value or level of 1 or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind . . . .” 2 The fourth subpart refers to a contract “that is, or in the future becomes, commonly known to the trade as a swap.” The fifth part refers to a “security-based swap agreement” that has “a material term . . . based on the price, yield, value, or volatility of any Robinhood, it argues for an expansive understanding of the overall phrase to mean essentially any potential financial consequence from the event. 2 Subpart (iii) also identifies “commonly known” transactions of this sort, such as interest rate swaps, foreign exchange swaps, and the like. Admittedly, a few of the specifically identified swaps in subpart (iii) do not directly reference a financial instrument or measure, such as a weather swap or an emissions swap. But Congress could have concluded that such swaps are so closely related to financial consequences or were already so commonly traded as swaps as to include them within the definition. Additionally, weather (and its impacts on agriculture, among other things) and emissions are linked to the national interest in a way that the outcome of a sporting event or how many points a particular team scores are not.
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