Case 2:25-cv-00575-APG-BNW Document 237 Filed 11/24/25 Page 14 of 29
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security . . . .” Finally, the sixth part covers any contract “that is any combination or permutation” of contracts in the other five parts. See also 17 C.F.R. § 1.3 (defining swap to have the meaning set forth in the CEA and including “particular products” like cross-currency swaps, currency options, and foreign exchange rate agreements). Reading subpart (ii) in context of the surrounding subparts supports the conclusion that “associated with a potential financial, economic, or commercial consequence” means that the event or contingency must be inherently associated with a potential financial consequence, not just that the event or contingency may have some potential downstream financial consequence. See Yates v. United States , 574 U.S. 528, 543 (2015) (referring to the principal that “a word is known by the company it keeps . . . to avoid ascribing to one word a meaning so broad that it is inconsistent with its accompanying words, thus giving unintended breadth to the Acts of Congress” (simplified); Beecham v. United States , 511 U.S. 368, 371 (1994) (“That several items in a list share an attribute counsels in favor of interpreting the other items as possessing that attribute as well.”). Thus, externalities like whether people bet on the event or contingency, or whether the event’s occurrence or nonoccurrence causes downstream financial consequences, are not sufficient. 3 3 In litigation between Kalshi and the CFTC, Kalshi distinguished election contracts from those involving gaming by stating that games and events like horse racing or boxing matches “are staged purely for entertainment and to facilitate betting. They have no independent significance; their outcomes carry no economic risks.” KalshiEX, LLC v CFTC , ECF No. 17-1 at 40 (D.D.C. 1/25/2024) (the D.C. Kalshi case). Kalshi also stated at oral argument in front of the D.C. district court that a game has “no inherent economic significance. . . . Contracts that involve games are probably not the type of contracts that we want to be listed on an exchange, because they don’t have any real economic value to them. But again, what’s tying that together is the existence of the game because the game is the thing that doesn’t have intrinsic economic significance.” ECF No. 40 at 15. Kalshi reiterated this position to the D.C. Circuit, arguing that “a game doesn’t have economic consequences outside of the game itself.” D.C. Cir. Case No. 24- 5205, Stay OA Tr. at 63:14-15. Kalshi also told me at the April 8, 2025 TRO hearing that a coin flip would not be a swap because it does “not have independent real-world consequences” and that would not change just because people bet on it. ECF No. 46 at 7. Kalshi has changed its tune and now self-certifies to
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