Case 2:25-cv-01541-JCM-DJA Document 7 Filed 08/19/25 Page 25 of 31
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Indeed, the Supreme Court has recognized that the CEA establishes “a comprehensive regulatory structure to oversee the volatile and esoteric futures trading complex.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran , 456 U.S. 353, 356 (1982) (quoting H.R. Rep. No. 93-975, at 1 (1974)). Accordingly, the CEA, as amended in 1974 to give the CFTC exclusive jurisdiction and in 2010 to add swaps and the special rule regarding event contracts, expressly or impliedly preempts the field of commodity futures and swaps trading, including event contracts trading, on designated contract markets. In addition to express or implied field preemption, conflict preemption exists here with respect to the determination of which event contracts are permitted on CFTC-designated exchanges. As noted above, the special rule relating to CFTC review of event contracts vests the CFTC with the power to approve or prohibit certain event contracts. 7 U.S.C. § 7a-2(c)(5)(C)(i); 17 C.F.R. § 40.11(a)(1)-(2). If the Board were permitted also to make a determination about whether event contracts on a CFTC-regulated exchange were permitted, there would be a direct conflict between federal and state regulation because the CFTC has already impliedly approved these same event contracts. See Crosby v. Nat. Foreign Trade Council , 530 U.S. 363, 380 (2000) (conflict preemption exists where state law “undermines the congressional calibration of force” and is “at odds with achievement of the federal decision about the right degree of pressure to employ”); De la Cuesta , 458 U.S. at 153 (conflict preemption exists where “state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” and where “compliance with both federal and state regulations is a physical impossibility” (internal quotation marks omitted)). Here, the CFTC has determined to allow Kalshi’s sports-related event contracts by taking no action in response to Kalshi’s self- certification of those contracts, making them legal under federal law, but the Board has threatened to preclude trading of those same event contracts by enforcing Nevada gaming laws. The conflict is clear.
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