Case 2:25-cv-01541-APG-DJA Document 32 Filed 09/30/25 Page 9 of 21
“involve[], relate[] to, or reference[] … gaming, or an activity that is unlawful under any State or
1
Federal law.” 7 The CFTC acted consistently with Congress’s intent that the Special Rule prevent the usage
2
3
of event contracts “to enable gambling,” particularly sports betting. In fact, as Senator Lincoln—
4
one of the principal architects of the Special Rule—explained:
5
[It] is our intent … [that the Special Rule] prevent derivatives contracts that are contrary to the public interest because they exist predominantly to enable gambling through supposed “event contracts.” It would be quite easy to construct an “event contract” around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament. These types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling.
6
7
8
9
10
11
156 Cong. Rec. S5906–7 (daily ed. July 15, 2010). 8
12
Because Robinhood’s sports event contracts involve both gaming and unlawful activity
13
under state and federal law, they expressly violate 17 C.F.R. § 40.11(a)(1) and, therefore, fall
14
outside the scope of the CFTC’s exclusive jurisdiction.
15
Because Robinhood’s sports event contracts constitute sports betting, they therefore
16
necessarily involve gaming in violation of § 40.11(a)(1). See Br. of Appellee at 17, KalshiEX LLC
17
v. CFTC , No. 24-5205 (D.C. Cir. Nov. 15, 2024), Doc. No. 2085055 (“An event
18
contract … involves ‘gaming’ if it is contingent on a game or a game-related event—like the
19
Kentucky Derby, Super Bowl, or Masters golf tournament , all of which were mentioned in the
20
21
7 Robinhood assumes that the CFTC regulations entail a two-step process, whereby the event contract must first involve one of the prohibited activities under § 40.11(a)(1) and then the CFTC must separately conduct a 90-day review under § 40.11(c) to determine whether the contract is contrary to the public interest. See ECF No. 7 at 6. Not so. Instead, § 40.11(a)(1) imposes a categorical prohibition on event contracts involving gaming or unlawful activity. There is no two- step review process needed because the CFTC has already determined that such event contracts are contrary to the public interest. 8 In an amicus brief filed in the Third Circuit, Senator Lincoln effectively re-affirmed this position, stating: “Congress intended for the CFTC to use the special rule to guard against gambling on the exchanges. And it contemplated that sports contracts would fall within this regulatory sweep .” Br. of Amici Curiae Former Members of Cong. in Supp. of Pl.-Appellee at 29, KalshiEX, LLC v. Flaherty , No. 25-1922 (3d Cir. July 31, 2025), ECF No. 66 (emphasis added).
22
23
24
25
26
27
28
- 9 -
Made with FlippingBook - Online catalogs