Case: 2:25-cv-01165-SDM-CMV Doc #: 69 Filed: 03/09/26 Page: 8 of 21 PAGEID #: 901
Kalshi argues that the CEA preempts Ohio’s sports gambling laws and, as a
result, Ohio cannot regulate the sports-event contracts either directly (by requiring
Kalshi to apply for a license) or indirectly (by restricting Kalshi’s ability to do
business with Ohio licensees). In Kalshi’s view, the CEA’s grant of exclusive
jurisdiction over DCMs and the event contracts they list gives the CFTC authority
over the sports-event contracts. Ohio argues in response that sports-event contracts
fall outside the CFTC’s exclusive jurisdiction and that, in any case, Congress did not
intend the CEA to preempt states from exercising their police power to regulate
sports gambling.
1.
The CEA does not govern the sports-event contracts.
Before considering whether the CEA preempts Ohio’s sports-gambling laws,
the Court must ask whether the CEA even applies. The CEA grants the CFTC
“exclusive jurisdiction” over “accounts, agreements . . . , and transactions involving
swaps . . . traded or executed on a” DCM. 7 U.S.C. § 2(a)(1)(A). The CEA provides
several definitions of “swap.” See 7 U.S.C. § 1a(47)(A). Kalshi relies on subsection
(ii), which defines a “swap” as a contract “that provides for . . . payment . . . that is
dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an
event or contingency associated with a potential financial, economic, or commercial
consequence[.]” 7 U.S.C. § 1a(47)(A)(ii). The CEA does not define the words
comprising this definition. The parties disagree over whether the sports-event
contracts constitute “swaps.” 2
2 Kalshi engages in a painstaking effort to point out differences between traditional gambling and the sports-event contracts traded on its exchange. ( See
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