Case 2:25-cv-01541-JCM-DJA Document 7 Filed 08/19/25 Page 22 of 31
1 2 3 4 5 6 7 8 9
designated contract market or swap execution facility.” Id. § 7a-2(c)(5)(C)(i). The “special rule,” added by the Dodd-Frank Act of 2010, Pub. L. No. 111-203, § 745(b), 124 Stat. at 1735-36, makes clear that the CEA’s grant of exclusive jurisdiction to the CFTC extends to event contracts. This Court’s ruling in KalshiEx that the CEA expressly preempts state gaming laws as applied to trading of sport-related event contracts on Kalshi’s DCM was correct and consistent with authority. No. 2:25-cv-00575, 2025 WL 1073495, at *3-7; see also KalshiEx (D. N.J.) , 2025 WL 1218313, at *5. 3 Second , to the extent the text of the statute leaves any doubt about preemption, the legislative history of the 1974 amendment to the CEA that established the CFTC confirms that this grant of exclusive jurisdiction was intended to establish broad field preemption. As the Conference Committee explained, “[u]nder the exclusive grant of jurisdiction to the Commission, the authority in the Commodity Exchange Act (and the regulations issued by the 3 One district court reached the opposite conclusion about Kalshi’s event contracts in deciding a motion for a preliminary injunction. KalshiEx LLC v. Martin , No. 25-cv-1283-ABA, 2025 WL 2194908, at *1 (D. Md. Aug. 1, 2025), appeal filed , No. 25-1892 (4th Cir. Aug. 1, 2025). But that decision is inconsistent with the weight of authority on this question, and its reasoning is unpersuasive for a number of reasons. Foremost, the decision does not address whether the CEA expressly preempts state law. Id. at *5-13 (stating that “Kalshi does not contend that the CEA expressly preempts state law” and analyzing only implied field and conflict preemption). As a result, the court wrongly applies a presumption against preemption, id. at *5-6, which has no place where “the statute contains an express pre-emption clause,” Commonwealth of Puerto Rico v. Franklin Cal. Tax-Free Trust , 579 U.S. 115, 125 (2016). Among other defects with the Maryland district court’s reasoning, the court assumes, wrongly and without analysis, that sports-related event contract trading is gambling, and that assumption colors the entire opinion. See, e.g. , Martin , 2025 WL 2194908, at *6 (“Kalshi’s burden with respect to its field preemption claim is to establish that Congress clearly and manifestly intended to strip states of their authority to regulate gambling if the company offering such wagering opportunities has been approved to sponsor a designated contracts market for commodities trading.”). The court also does not consider the conflict between application of state gaming laws and the Special Rule in 7 U.S.C. § 7a-2(c), namely Congress’s decision in enacting the Special Rule that the CFTC would be the decisionmaker, not the Board. See id. at *11-13 (failing to analyze this conflict in the discussion of conflict preemption). This Court therefore should disregard the Martin decision as lacking persuasive power.
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
15
Made with FlippingBook - Online catalogs