KalshiEX LLC v. CFTC , No. 24-5205 (D.C. Cir. Nov. 15, 2024) (“An event or contract thus involves ‘gaming’ if it is contingent on a game or game-related event. The classic example is a contract on the outcome of a sporting event; as the legislative history directly confirms, Congress did not want sports betting to be conducted on derivatives markets .” (emphasis added, citation omitted)). The Special Rule and the CFTC’s regulations undermine any claim that Congress intended to repeal IGRA and legalize sports betting. That the CEA and IGRA overlap here is due only to Kalshi’s backdoor attempt to evade comprehensive gaming regulations. 6 Furthermore, only Kalshi (an interested private company), not Congress or the CFTC, claims that the CEA’s definition of “swap” displaces tribal, state, and federal regulation of sports betting. The text and legislative history of the 2010 CEA amendments, as well as subsequent CFTC actions, confirm that the CFTC was not established to regulate sports betting, let alone assume the role of the nation’s sole sports-betting regulator. Ultimately, Kalshi’s attempt to foist authority onto the CFTC (which the CFTC does not claim for itself) indicates that Kalshi is wrong about the meaning of “swap.” See Event Contracts, 89 Fed. Reg. 48968, 48982–83 (June 10, 2024) (“The 6 Under Kalshi’s theory, simply calling a sports wager a “swap”—regardless of whether it is actually a valid “swap”—and listing it for trade on a DCM automatically grants the CFTC exclusive jurisdiction, to the detriment of all other regulatory authorities. See Pl. Memo. Supp. TRO and Prelim. Inj. at 14–15, Dkt. No. 7. What, then, would prevent Kalshi from calling “contracts” on other traditional forms of gaming, like roulette and lotteries, “swaps” and subjecting them to the exclusive jurisdiction of the CFTC? According to Kalshi, CFTC inaction—despite banning “gaming” contracts via 17 C.F.R. § 40.11(a)(1)—is all that is required to bless contracts blatantly designed for no other purpose than to enable gambling. Kalshi’s theory would likewise strip this Court of its own jurisdiction to interpret what constitutes a “swap.” Kalshi has argued that determination is exclusively up to the CFTC and would only be judicially reviewable pursuant to an Administrative Procedures Act challenge. See Pl.’s Resp. in Opp. to Emergency Mot. to Dissolve Prelim. Inj. at 7, Hendrick , No. 2:25-cv-00575 (Oct. 31, 2025), ECF No. 183. “But the CEA does not expressly delegate to the CFTC the exclusive power to decide what is a swap … [and] [n]othing in the CEA takes statutory interpretation away from courts.” Crypto.com , 2025 WL 2916151, at *6.
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Case 3:26-cv-00034 Document 40-1 Filed 01/23/26 Page 11 of 22 PageID #: 448
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