one might say, hide elephants in mouseholes.” Epic Sys. , 584 U.S. at 515 (internal quotations omitted). Here, IGRA and the CEA can easily be harmonized by reading the CEA to exclude sports betting, consistent with longstanding CFTC regulations. 1. Kalshi’s sports-betting contracts are not “swaps.” As relevant here, the CEA defines “swaps” as “any agreement, contract, or transaction … that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” 7 U.S.C. § 1a(47)(A)(ii). Kalshi’s sports-betting contracts simply do not fall under this definition and Congress therefore could not have intended to repeal IGRA. 5 First, Kalshi’s sports-event contracts are not dependent on the occurrence, nonoccurrence, or extent of the occurrence of a sports event—i.e., whether the sports event occurs—but rather on the outcome of the sports event (or parts thereof)—i.e., which team wins or who scores a touchdown. In three recent decisions, the Nevada District Court held that sports bets are not swaps for precisely this reason. Crypto.com , 2025 WL 2916151, at *1, 7–9; Hendrick , 2025 WL 3286282, at *3; Robinhood Derivatives, LLC v. Dreitzer , No. 2:25-cv-1541, 2025 WL 3283308, at *1 (D. Nev. Nov. 25, 2025). Second, there is no “financial, commercial, or economic consequence” associated with Kalshi’s sports-betting contracts. Aside from whether the purchaser of a sports-betting contracts
5 Kalshi has previously argued that its preemption argument applies even if its sports-betting contracts are not swaps because they involve “excluded commodities.” But even under that theory, 7 U.S.C. § 2(a) “does not state that the CFTC has exclusive jurisdiction over excluded commodities, which are defined separately from commodities.” Hendrick , 2025 WL 3286282, at *11.
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NSH 3426338.2
Case 3:26-cv-00034 Document 40-1 Filed 01/23/26 Page 9 of 22 PageID #: 446
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