Case: 25-7516, 01/23/2026, DktEntry: 33.1, Page 51 of 110
that allows the CFTC to prohibit trading in contracts that are “contrary to
the public interest”; it does not define “swap.” Id.
Importantly , the CFTC has exercised its Special-Rule authority to cat-
egorically ban contracts involving “gaming” on DCMs. 17 C.F.R. § 40.11(a).
The CFTC did that specifically to “prevent gambling through the futures
markets.” Provisions Common to Registered Entities, 76 Fed. Reg. 44776-
01, 44786 (July 27, 2011) (internal quotation marks omitted). Kalshi thus
cannot rely on the Special Rule to require trading its sports bets on DCMs
on the theory that they are “swaps.” Citing 17 C.F.R. § 40.11(c), Kalshi
argues (Br. 59 n.9) that the regulation does not categorically prohibit gam-
ing contracts, but only subjects them to case-by-case review. But the terms
of the regulation are clear and unequivocal: DCMs “shall not list” any con-
tracts that “involve[], relate[] to, or reference[]” “gaming.” 17 C.F.R.
§ 40.11(a). Section 40.11(c) merely confirms that if a DCM lists such a con-
tract, the CFTC may review it and order it taken down. 1-ER-28 n.13. The
Special Rule thus does not help Kalshi.
c. Kalshi’s interpretation is inconsistent with Congress’s purposes and the CFTC’s guidance Interpreting “swap” to cover sports betting is not consistent with Con-
gress’s purposes in enacting the Dodd-Frank Act.
Congress added “swaps” to the CEA to strengthen regulation of finan-
cial markets following the 2008-2009 financial crisis, because unregulated
33
Made with FlippingBook - Online catalogs