Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 18 of 36
court was correct, it would not matter because Kalshi is not offering “contracts of sale of [sports
events] for future delivery, ” and “excluded commodity” does not appear in the CFTC’s exclusive
jurisdiction. 7 U.S.C. § 2(a)(1)(A). Thus, Kalshi’s gaming devices do not qualify as “contracts of
sale of commodities for future delivery.”
2. Kalshi’s Gaming Devices Are Not Swaps Within the Ordinary Meaning of the CEA, Canons of Statutory Interpretation, or the CEA’s Legislative History.
a. Kalshi's Gaming Devices Are Not Associated with a Potential Financial, Economic, or Commercial Consequence.
The CEA defines “swap” as an agreement, contract, or transaction, that “is dependent on
the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency
associated with a potential financial, economic, or commercial consequence. ”
7 U.S.C. §
1a(47)(A)(ii). 7 Kalshi has previously conceded that sporting events are not “associated with
potential financial, economic, or commercial consequence.” In its brief to the D.C. Circuit in a
related manner, Kalshi acknowledged that “as the legislative histo ry directly confirms, Congress
did not want sports betting to be conducted on derivatives markets.” Appellee’s Br. at 41,
KalshiEX LLC v. CFTC , No. 24-5205, 2024 WL 4802698 (D.C. Cir. Nov. 15, 2024). Kalshi
further explained:
The basic purpose of Designated Contract Markets is to allow “hedging” of economic risk. 156 Cong. Rec. S5907 . Contracts that “serve[] no commercial purpose at all” may therefore not deserve to be traded on a regulated exchange. Id . at S5906. And, at least in general, contracts relating to games – again, activities conducted for diversion or amusement – are unlik ely to serve any “commercial or hedging interest.’
7 The CEA provides for several other definitions of “swap,” but Kalshi argues that its sports gaming contracts fit this definition. ECF 2 at 6.
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