Case: 2:25-cv-01165-SDM-CMV Doc #: 69 Filed: 03/09/26 Page: 3 of 21 PAGEID #: 896
in the aftermath of the 2008 financial crisis. DTCC Data Repository (U.S.) LLC v.
U.S. Commodity Futures Trading Comm’n , 25 F. Supp. 3d 9, 11 (D.D.C. 2014).
Kalshi was first approved as a designated contract market (“DCM”) in 2020.
The company “specializes in event contracts,” which are instruments that provide
for payment based on the occurrence of an event or contingency. (Compl., ¶ 47.) See
also 7 U.S.C. §§ 1a(47), 7a-2(c)(5)(C). As Kalshi describes it, an event contract
identifies a future event with several possible outcomes, a payment schedule for the outcomes, and an expiration date. Most commonly, event contracts involve a binary question: Every “yes” position has an equal and opposite “no” position. For example, a . . . contract might center around whether an earthquake will take place in Los Angeles County before December 31, 2025. A purchaser may trade on either the “yes” or the “no” position on the contract. If an earthquake does take place in Los Angeles County before the end of the calendar year, then the “yes” positions would be paid out.
(Compl., ¶ 29.)
A DCM must conduct its business in accordance with certain “core
principles,” including that the DCM comply with the CEA and any CFTC rules and
regulations. 7 U.S.C. § 7(d)(1)(A). A DCM can list new contracts for trading on its
exchange in two ways: it can either request approval from the CFTC, 7 U.S.C. § 7a-
2(c)(4), or it can “self-certify” that the contract complies with all applicable law and
list the contract subject to an opportunity for CFTC review, 7 U.S.C. § 7a-2(c)(1).
Event contracts are subject to an additional “Special Rule” for review and approval.
7 U.S.C. §§ 7a-2(c)(5)(C)(i), (ii). Under the Special Rule, the CFTC has explicit
authority to conduct a public-interest review of newly listed event contracts that
“involve” unlawful activity, terrorism, assassination, war, gaming, or other similar
activity. Id . The CFTC has further authority to prohibit a DCM from listing an
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