Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 14 of 36
in the CFTC’s exclusive jurisdiction to being “associated with a potential financial, economic, or
commercial consequence. ” See 7 U.S.C. § 1a(47)(A). Congress also enacted a “Special Rule”
allowing the CFTC to determine if certain event contracts are contrary to the public interest and
prohibit these contracts listing, trading, and clearing on registered entities such as DCMs. See 7
U.S.C. § 7a-2(c)(5)(C)(i)-(ii).
In 2011, shortly after the passage of Dodd-Frank, the CFTC exercised its authority under
the Special Rule and promulgated Regulation 40.11(a)(1), banning the trade of contracts involving
gaming on DCM’s. The CFTC prohibited any “agreement contract, transaction, or swap based
upon an excluded commodity … that involves, relates to, or references terrorism, assassination,
war, gaming, or an activity that is unlawful under any State or Federal law.”
17 C.F.R. §
40.11(a)(1). In addition to this ex ante prohibition, the CFTC also provided an ex post review
process to determine whether an event contract may involve any of these prohibited activities. 17
C.F.R. § 40.11(c).
IV. M ARYLAND D IRECTS K ALSHI TO C EASE AND D ESIST U NLICENSED S PORTS W AGERING .
In January 2025, Kalshi first began listing its gaming devices on its DCM through the self-
certification process. ECF 1 at ¶ 49. By letter dated January 22, 2025, Kalshi filed a “CTFC
Regulation 40.2(a) Notification of Regarding the initial listing of the ‘Will <team> Win <title>?’”
to the CTFC. Exhibit 6, January 22, 2025 Notification of Initial Listing Contract. As part of the
filing, Kalshi certified that the gaming device to be listed “complie[d] with the [CEA] and [CFTC]
regulations thereunder.” Id. at 4.
On April 7, 2025, the Commission sent a Notice to Cease and Desist to Kalshi. ECF 1-1.
The Commission informed Kalshi that its gaming devices violated Maryland law, and directed
Kalshi to “ immediately cease and desist offering ” them in the state. Id. The Cease and Desist
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