Case: 25-7516, 01/23/2026, DktEntry: 33.1, Page 47 of 110
They have potential economic consequences “without looking at externali-
ties like potential downstream financial consequences.” Id.
A sports bet does not hedge against existing risk; it creates the risk.
Who wins a sports game generally does not have any direct economic conse-
quence that someone would wish to hedge against (except, perhaps, for the
participants, who cannot bet on their own games). Kalshi has admitted that
sports are “staged purely for entertainment” and “their outcome[s] carry no
economic risks,” Mot. for Summ. J. at 30, KalshiEX LLC v. CFTC , No. 23-
3257 (D.D.C. Jan. 25, 2024) (Dkt. 17-1), and that “a game doesn’t have eco-
nomic consequences outside of the game itself,” 1-ER-15 n.3 (internal quo-
tation marks omitted). Sports contracts thus “are unlikely to serve any com-
mercial or hedging interest.” Kalshi Br. at 45, KalshiEX LLC v. CFTC , No.
24-5205 (D.C. Cir. Nov. 15, 2024) (internal quotation marks omitted).
Kalshi now argues (Br. 46) that its sports contracts do have economic
consequences. But it provides ( id. ) only one real-world example where its
platform supposedly was used to hedge commercial risk—a sportsbook that
uses Kalshi’s contracts to hedge its gaming risk. That is just bootstrapping
gaming risk onto itself, not hedging external economic risk.
Kalshi’s bottom line (Br. 45-46, 51-54) is that because every event has
some possible downstream economic consequence, every event contract
qualifies as a “swap.” Its view “knows no limiting principle.” 1-ER-13.
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