Case: 25-7516, 01/23/2026, DktEntry: 33.1, Page 34 of 110
The implications of Kalshi’s position are extreme. Under Kalshi’s
view, all sports bets would qualify as swaps, futures, or options. The CEA
expressly requires that all consumer swaps, futures, and options be traded
only on CFTC-registered DCMs. So all sports betting would have to be done
on CFTC-registered DCMs, and nowhere else. The CFTC would be the Na-
tion’s sole sports-betting regulator, to the complete exclusion of States and
Tribes. Kalshi attempts to avoid that absurd result, but ultimately has no
way around it.
As a fallback, Kalshi argues that this Court cannot even decide the
threshold question whether its contracts are commodity derivatives. But
Kalshi brought this lawsuit and invoked the CEA to enjoin State Defend-
ants; of course this Court can decide whether the CEA applies. State De-
fendants are not required to sue the CFTC, because they are not seeking to
enforce the CEA; they want to enforce Nevada law. Besides, the CFTC has
not taken any action to approve Kalshi’s contracts, so there would be no
basis for such a lawsuit.
B. Even if Kalshi’s products were within the CFTC’s jurisdiction, the
CEA would not preempt all state gaming law. The regulation of gaming is
at the heart of the States’ police power, and taking away that power would
have vast economic and political consequences. Congress would need to
speak exceptionally clearly if it intended that result. Nothing in the CEA
shows that clear intent.
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