Case: 25-7516, 01/23/2026, DktEntry: 33.1, Page 33 of 110
Kalshi attempts to avoid this question altogether by arguing that the
CFTC has “exclusive jurisdiction” over any contract traded on a DCM. But
that is not what the CEA says: It gives the CFTC jurisdiction over swaps,
futures, options, and other listed derivatives that are traded on DCMs or on
other markets. 7 U.S.C. § 2(a)(1)(A). Simply trading on a DCM is not
enough.
Kalshi’s contracts are not “swaps.” Swaps are financial instruments
used to hedge risk. The statutory definition reflects that understanding; it
requires payment to be based on the “occurrence” of an “event” that is “as-
sociated with” potential economic consequences, meaning events that create
risk against which a business could want to hedge. 7 U.S.C. § 1a(47)(A)(ii).
Kalshi’s contracts are based on the outcomes of sports events, not on
whether the events occur. And as Kalshi has admitted, sports bets are not
used to hedge existing economic risk; the bets create the risk. Kalshi’s ex-
pansive definition of “swaps” is limitless; it would encompass a “contract on
anything that happens or could happen.” 1-ER-13-14.
Kalshi’s contracts also are not “option[s]” or “contracts of sale of a com-
modity for future delivery.” Notably, Kalshi told the CFTC that its con-
tracts are “swaps,” and the definition of swaps expressly excludes options
and futures. Anyway, its contracts do not qualify as options or futures un-
der the settled meanings of those terms.
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