Case: 2:25-cv-01165-SDM-CMV Doc #: 69 Filed: 03/09/26 Page: 12 of 21 PAGEID #: 905
commodity prices. Currency exchange rates, the weather, and energy costs all do
that; the number of points scored in the Huskies-Bobcats game does not. 4
This conclusion is further supported by the Court’s obligation to avoid
absurdity. Ohio argues that absurd results would flow from defining a “swap” to
include a sports-event contract. The Court agrees. The CEA makes it “unlawful for
any person[ 5 ] . . . to enter into a swap” outside of a DCM. 7 U.S.C. § 2. Under
Kalshi’s construction, a sports-event contract is a swap because it is a contract for
payment based on the outcome of a sporting event. But if that is true, then all
contracts for payment based on the outcome of a sporting event—all sports bets—
would be forced onto DCMs like Kalshi and every sportsbook in the country would
be put out of business. 6 In the absence of congressional intent to effect such a sea
4 The Middle District of Tennessee recently issued a decision granting Kalshi’s motion for preliminary injunction after finding that the sports-event contracts constitute swaps. Orgel , 2026 WL 474869 at *7. But the court stopped short of considering whether Kalshi’s or the state’s interpretation of the CEA better served the statute’s purpose. Instead, the court pointed to United States v. Phillips , 155 F.4th 102 (2d Cir. 2025) to support its conclusion that, under the plain language of the CEA, Kalshi’s sports-event contracts are swaps. Orgel at *8. But the swap at issue in Phillips dealt with the exchange rate of the U.S. dollar to the South African rand—a financial measure that directly affects commodity prices. 5 Eligible contract participants (institutional or other highly sophisticated investors) are permitted to enter into off-DCM swaps. See 7 U.S.C. § 1a(18) (defining “eligible contract participant”). 6 Further, as Amici argue (and Kalshi does not dispute), finding that sports- event contracts are swaps, and thus must be traded on DCMs would have a seismic impact on Indian tribes’ authority to regulate gaming on tribal land. (Amicus Br., generally .) “Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns , 531 U.S. 457, 468 (2001).
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