Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 16 of 36
regulatory authority to prohibit Kalshi from conducting sports wagering business within its
borders. The CFTC’s exclusive jurisdiction includes (1) commodity futures and (2) swaps that are
(3) traded or executed on DCMs. See 7 U.S.C. § 2(a)(1)(A). First, Kalshi’s gaming devices do not
qualify as commodity futures or swaps under the CEA and therefore are not within the CFTC ’s
exclusive jurisdiction. The ordinary meaning of the CEA, several canons of statutory
interpretation, and legislative history all indicate that gaming devices are not commodity futures
or swaps. Infra at §I.A. Second, e ven if they do qualify as swaps, Kalshi’s gaming devices are
specifically prohibited from being offered on a DCM by 17 C.F.R §40.11(a)(1) because they are
illegal under federal and Maryland law and involve gaming. Infra at §I.B.
A.
Kalshi’s Illegal Gaming Devices Are Outside of the C FTC’s Exclusive Jurisdiction Because They Are Not Commodity Futures or Swaps.
Kalshi self-defines its gaming devices as “event contract s ,” but this term is not included in
the statutory text of the CFTC’s “exclusive jurisdiction.” 5 7 U.S.C. § 2(a)(1)(A). Despite “event
contracts” not being in the CFTC’s “exclusive jurisdiction,” Kalshi erroneously argues that
anything traded or executed on a DCM is still subject to the exclusive jurisdiction of the CFTC.
See ECF 2 at 6. Though the District of Nevada accepted this argument, it is incorrect. See
KalshiEX, LLC v. Hendrick , No. 2:25-CV-00575-APG-BNW, 2025 WL 1073495, at *6 (D. Nev.
Apr. 9, 2025). The act of offering a contract on a DCM does not bring necessarily that contract
into the CFTC’s exclusive jurisdiction. 6
5 The CEA uses the term “[e]vent contracts” only to specify contr acts that Congress wished to exclude from CFTC-designated exchanges. 7 U.S.C. § 7a-2(c)(5)(C)(i). The CTFC, however, specifically prohibited gaming contracts such as Kalshi’s under 17 C.F.R. § 40.11(a)(1) . See infra at §I.B(1). 6 Kalshi could self- certify a contract for 101 dalmatians deliverable immediately, but Maryland’s puppy mill laws would still apply because such a contract is neither a swap nor a commodity future. Like retail puppy contrac ts, sports wagers are not in the CFTC’s exclusive jurisdiction. See infra § I.A .
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