Case: 25-1922 Document: 73 Page: 7
Date Filed: 08/14/2025
INTRODUCTION Despite well over a century of state gambling regulation and federal statutes that consistently accept and incorporate such state laws, Kalshi contends that Congress silently undid decades of federal gambling policy and superseded state gambling laws by adding a single word—“swaps”— to the CFTC’s “exclusive jurisdiction” as part of the 2010 Dodd-Frank re- forms. The upshot is that Kalshi thinks it is exempt from state gambling laws simply because it offers sports wagers in a new format (called event contracts) on a CFTC-designated contract market. Still, Kalshi ar- gues (at 3) that its position is not as extreme as it sounds because the Commodity Exchange Act “preempts state gambling laws only as nar- rowly applied to trading on [designated contract markets], leaving state law unaffected in every other application.” But Kalshi’s nothing-to-see- here argument ignores that it is a federal crime to willfully trade swaps outside CFTC-regulated exchanges. So with Kalshi’s expansive definition of “swap” covering essentially all gambling, there is no “other application” left for longstanding state gambling laws to regulate. That has never been the law. Instead, for the reasons explained by Appellants and their amici— including 36 States and 60 federally recognized tribes—this Court should reject Kalshi’s attempt to federalize the multi-billion-dollar gaming in- dustry. For one, the term “swap” in the Act does not cover event contracts tied to athletic events, so the CFTC’s “exclusive jurisdiction” never comes
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