USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 60 of 97
contingent event. See KalshiEX , 2024 WL 4164694, at *12 (noting that this
is not a “plausible” outcome in part “ because the CEA specifically preempts
the application of state law over derivative markets ” ).
States like Maryland have at least authorized gambling subject to
licensure requirements, but others prohibit gambling entirely. Hawaii prohibits participation “in any gambling activity, ” Haw. Rev. Stat. § 712-1223 (emphasis added), which it defines as “stak [ing] or risk[ing] something of value upon … a future contingent event. ” Id. § 712-1220. And some states reserve the “full and absolute” right to deny a gaming license “for any cause” they “deem [ ] reasonable.” States’ Br. 24 , KalshiEX LLC v. Flaherty , No. 25- 1922 (3d Cir.). If Defendants prevail, each of these states could categorically ban all event contracts or futures contracts. Indeed, if the district court is right, Dickson remains good law, and states remain free to wield their
gambling laws to m ake “ gambling in grain futures illegal. ” 288 U.S. at 198.
The district court’s opinion exposes the pitfalls of its extratextual
approach to preemption. The court acknowledged that “ a state presumably
lacks authority to have a parallel regulatory regime for grain futures .” JA 161.
But the exclusive- jurisdiction provision applies to “future[s]” contracts and
“swaps” in the same way. 7 U.S.C. § 2(a)(1)(A). Even Defendants conceded
below that the two “rise and fall together.” JA 140, 143. If states may indeed
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