Case 1:25-cv-01283-ABA Document 26 Filed 05/09/25 Page 26 of 36
Rec. S5902-01, S5907 (July 15, 2010) (statement of Senator Lincoln). Rather evidencing an intent
to the CFTC jurisdiction over sports gaming, legislative history indicates just the opposite.
B. The CTFC Has Expressly Prohibited Gaming Devices from Being Offered on a DCM.
1. 17 C.F.R. § 40.11 Prohibits Listing any Contract Involving Gaming.
Pursuant to the CEA’s Special Rule, the CFTC was delegated authority to determine if
certain “Event Contracts” should be prohibited as being “contrary to the public interest.” 7 U.S.C.
§ 7a-2(c)(5)(C)(i) . The CFTC’s discretion extended to contracts involving: “(I) activity that is
unlawful under any Federal or State law; (II) terrorism; (III) assassination; (IV) war; (V) gaming;
or (VI) other similar activity determined by the Commission, by rule or regulation, to be contrary
Id. As admitted by Kalshi, the CFTC then adopted Regulation
to the public interest.”
40.11(a)(1),(2) to implement the discretion delegated to it by the Special Rule. ECF 2 at 7.
Consistent with the CEA’s delegation, Regulation 40.11(a)(1) expressly prohibits ex ante
gaming and otherwise illegal contracts from being offered on a DCM. The Rule states that a
“registered entity shall not list for trading” 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). (emphasis added).
Kalshi has admitted previously that the term “gaming” in
Regulation 40.11(a)(1) was intended to include sports wagering. Addressing the term “gaming”
in the Special Rule, Kalshi noted: “An event contract therefore involves ‘gaming’ if it is contingent
on a game or a game-related event – like the Kentucky Derby, Super Bowl, or Masters golf
tournament, all of w hich were mentioned in the provision's only legislative history.” Brief of
Appellee at 17, KalshiEX LLC , supra, 2024 WL 4802698 (emphasis added). In its Motion, Kalshi
admits that Regulation 40.11 was the CFTC’s implementation of the Special Rule. ECF 2 at 7.
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