Case 2:25-cv-00978-APG-BNW Document 42 Filed 08/04/25 Page 20 of 26
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seek to prohibit CDNA from offering Sports Events Contracts for trading in Nevada under pain of civil and criminal law. To the extent that the state law under which they purport to act is preempted in this context—and it is—it follows that CDNA will suffer irreparable harm from the unlawful enforcement of preempted state law. This irreparable injury is particularly significant, where, as here, “repetitive penalties attach to continuing or repeated violations and the moving party lacks the realistic option of violating the law once and raising its federal defenses.” Morales , 504 U.S. at 381. This Court confirmed these principles in Kalshi v. Hendrick I , holding that Kalshi’s “Hobson’s choice” between facing “civil and criminal liability” and “incur[ring] substantial economic and reputational harm as well as the potential existential threat” of losing DCM status demonstrated a likelihood of irreparable harm. 2025 WL 1073495, at *7. CDNA is faced with just such a Hobson’s choice here. In the absence of an injunction, CDNA has no adequate remedy at law for this harm. If CDNA were to comply with Defendants’ demands to cease and desist offering Sports Event Contracts to Nevada residents, it could lose its DCM status. Terminating existing contracts in Nevada and excluding users based on their location would violate CFTC Core Principles requiring exchange markets to provide “impartial access” to markets, 17 C.F.R. § 38.151(b), and prevent “market disruptions.” 17 C.F.R. § 38.255. These violations could cause CDNA to lose its CFTC designation as a DCM, putting its entire business in jeopardy. See 17 C.F.R. § 38.100(a) (requiring compliance with Core Principles to “be designated, and maintain a designation, as a contract market”). In addition, CDNA could be subject to significant civil penalties, further adding to the harm CDNA would incur absent an injunction. See 7 U.S.C. §§ 13a, 13a-1(d). No further proof is needed for the Court to find irreparable harm. CDNA does not need to quantify or prove the extent of the financial harm it would experience either from complying with or resisting Defendants’ cease-and-desist order because the imminent threat of enforcement of preempted state law is alone sufficient irreparable harm under Supreme Court and Ninth Circuit precedent. See Morales , 504 U.S. at 381–82; Valle del Sol , 732 F.3d at 1029. But it is obvious CDNA will experience financial and reputational harm without an injunction. Even if this Court issued the requested declaratory relief, CDNA would still incur costs defending against any
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