Case 3:25-cv-06162-JSC Document 35 Filed 09/04/25 Page 14 of 34
See KalshiEX LLC v. Martin , No. 25-cv-1283-ABA, 2025 U.S. Dist. LEXIS 147815, at *10 (D.
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Md. Aug. 1, 2025) (“Although Kalshi could have requested pre-approval from the Commission
regarding whether Kalshi could lawfully conduct sports betting on its platform, id . § 7a-2(c)(4)(A),
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instead on January 24, 2025, Kalshi self-certified and began listing sports-event contracts on its
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exchange, allowing users to place positions on which teams will advance in certain rounds of the
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NCAA College Basketball Championship or who will win the U.S. Open Golf Championship.”)
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(internal citations omitted).
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The CFTC has promulgated regulations that allow registered entities to self-certify event
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contracts through 17 C.F.R. § 40.2. Where self-certified products or contracts present compliance
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issues, the self-certifying registered entity must provide a “concise explanation and analysis that
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is complete” concerning “the underlying commodity, and the [contract’s] compliance with
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applicable provisions of the [CEA], including core principles, and the [CFTC] regulations
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thereunder.” 17 C.F.R. § 40.2(a)(3)(v). Kalshi’s self-certifying documents fail to address
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compliance concerns arising from contracts that facially involve gaming, let alone rebut the
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presumption that such contracts are prohibited as contrary to the public interest. Pls.’ Req. for
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Judicial Notice ¶¶ 1-5, Ex. 1-5. Kalshi’s gaming contracts, therefore, are presumptively prohibited
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and therefore presumptively unlawful.
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Lack of CFTC regulation and review under 17 C.F.R. § 40.11 does not constitute
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compliance with the CEA and the CFTC regulations. 17 C.F.R. § 40.3 is the only regulatory
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mechanism that compels CFTC contract review. The CEA and CFTC regulations do not require
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that the CFTC review every proposed contract or swap, and the CFTC staff lacks the resources to
review Kalshi’s expanding gaming contract market. Event Contracts, supra , 89 FR 48968-01 at
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*48969 (“From a resource allocation perspective . . . a single § 40.11(c) review is resource-
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intensive and consumes hundreds of hours of staff time.”). Primary responsibility for the regulation
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of Kalshi’s DCM and the evaluation of whether Kalshi’s products comply with the CEA and the
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CFTC regulations rests with Kalshi. Kalshi is, thus, a de facto regulator, primarily responsible for
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regulating its DCM. Since Kalshi is targeting the sports betting market in all fifty states, which
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5 NOTICE OF MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES [ Case No.: 25-cv-06162-JSC]
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