Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 20 of 36
outcome of the event had no financial, economic, or commercial consequences for anyone other
than McIlory or Rose. Because it was dependent only on the outcome of the underlying game,
Kalshi’s contract could not be said to be associated with a financial, commercial, or economic
consequence in the ordinary sense.
From a categorical perspective, the outcomes of sporting events generally do not have
direct financial consequences. Sporting events include youth, high school, adult recreational
leagues, and even many college contests that are not revenue-generating. In such events, nearby
food trucks might sell more hot dogs if the local team wins, but nobody would characterize the
outcome of most sporting events as associated with potential financial, economic, or commercial
consequences.
If the surrounding economic activity is considered “associated with” the outcome of a
sporting event, the CFTC would need to undertake a case-by-case inquiry as to whether a particular
sporting event is likely to have sufficient economic consequences such that bets on their outcomes
qualify as “swaps” immune from state regulation. This approach would be an administrative
nightmare for the CTFC and cannot be what Congress intended when it passed Dodd-Frank. It
makes far more sense to read the CEA’s definitions of “swaps” as referring to types or categories
of events typically associated with potential financial consequences, e.g. whether an earthquake
takes place in Los Angeles. See ECF at ¶29. As a category, however, the outcome of a sporting
event is not “an ev ent or contingency associated with a financial, commercial, or economic
consequence.”
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