USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 56 of 97
A. The District Court Erred In Creating A Gambling Exception To The CFTC’s Exclusive Jurisdiction . The district court acknowledged that Congress had “ some field-
preemptive intent ” when it enacted the CEA, but declared that the scope of
the preempted field “simply is not answered by the text” of the CEA. JA162-
163. Relying on mistaken assumptions about Congress ’s intent, the court
concluded that the CFTC’s exclusive jurisdiction did not encompass
“ gambling. ” JA162.
The district court’s analysis was fundamentally flawed. The text of Section 2(a) does answer the preemption question by plainly setting out the
field Congress sought to occupy: The CFTC has “exclusive jurisdiction” over
“transactions involving swaps” and “future[s]” contracts “traded or executed
on a” DCM. 7 U.S.C. § 2(a)(1)(A). The district court did not dispute that
Kalshi’s sports -event contracts are swaps, and further recognized that the
CEA’s plain text gives the CFTC exclusive jurisdiction over “t ransactions
involving swaps” on DCMs. JA162-163 n.4. 2 The district court offered no
2 Because the district court did not dispute that Kalshi’s sports -event contracts are swaps, its decision finds no support in the District of Nevada ’s recent decision holding that a different DCM’s sports -event contracts are not swaps. See N. Am. Derivatives Exchange, Inc. v. Nevada , No. 2:25-cv- 00978, at *8 (D. Nev. Oct. 14, 2025) (slip op.). The court there reiterated that the “ plain and unambiguous language ” of the CEA would preempt state regulation if sports-event contracts are swaps. Id. at *10 (quoting Hendrick , 2025 WL 1073495, at *5).
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