potentially other kinds of class III gaming) while allowing for-profit companies like Kalshi to run internet casinos pursuant to their own private regulations. What’s more, if sports-betting contracts are “swaps” subject to the exclusive jurisdiction of the CFTC, as Kalshi maintains, then all off-market sports betting—including sports betting conducted by tribes under IGRA—is prohibited by the CEA. See KalshiEX, LLC v. Hendrick , No. 2:25-cv-575, 2025 WL 3286282, at *1 (D. Nev. Nov. 24, 2025), appeal filed , No. 25-7516 (9th Cir. Nov. 28, 2025). With one inapplicable exception, the CEA prohibits off-market swaps. See 7 U.S.C. § 2(e). Consequently, if all sports-betting contracts are swaps, “then all sports betting must be done on a [Designated Contract Market (‘DCM’)].” N. Am. Derivatives Exch., Inc. v. Nevada Gaming Control Bd. ( Crypto.com ), No. 2:25-cv-00978, 2025 WL 2916151, at *9 (D. Nev. Oct. 14, 2025), appeal filed , No. 25-7187 (9th Cir. Nov. 14, 2025). Kalshi’s argument thus does double violence. On one hand, by permitting Kalshi to offer sports betting on tribal land, its argument sweeps aside Congress’s recognition that “Indian tribes have the exclusive right to regulate gaming activity on Indian lands.” 25 U.S.C. § 2701(5). On the other, it also prohibits tribes from offering sports betting that IGRA plainly authorizes. See 25 C.F.R. § 502.4(c). Moreover, if Kalshi’s position is adopted, the reach of this definition would extend beyond sports betting to encompass other forms of gaming because Kalshi’s preemption argument depends on embracing an interpretation of “swap” that has “no limiting principle.” Hendrick , 2025 WL 3286282, at *6; see Crypto.com , 2025 WL 2916151, at *9. Kalshi’s definition of “an event or contingency associated with a potential financial, economic, or commercial consequence” is so broad that it necessarily includes betting on other casino games or class III gaming. This means that virtually all gaming activity across the country would be illegal unless offered on a DCM. The
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NSH 3426338.2
Case 3:26-cv-00034 Document 40-1 Filed 01/23/26 Page 6 of 22 PageID #: 443
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