Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 2 of 17
INTRODUCTION Shortly before filing suit in this case, Kalshi obtained a preliminary injunction in Nevada on the ground that “Congress intended to occupy the field and preempt state law from applying to CFTC-designated exchanges.” KalshiEX, LLC v. Hendrick , No. 2:25-cv-00575, 2025 WL 1073495, at *6 (D. Nev. Apr. 9, 2025). Since filing this suit, Kalshi obtained yet another preliminary injunction in a New Jersey case presenting almost identical issues. KalshiEX LLC v. Flaherty , No. 25-cv-02152, 2025 WL 1218313 (D.N.J. Apr. 28, 2025). Like the Hendrick court, the Flaherty court concluded that “Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction.” Id. at *6. The court further concluded that Kalshi showed a likelihood of irreparable harm because “at minimum,” “harms to its reputation and goodwill” are “both likely without injunctive relief and not able to be remedied following trial.” Id . at *7. And the other equities favored Kalshi because “[t]he public interest [is] not served by the enforcement of an unconstitutional law.” Id. at *7 (quoting N.J. Retail Merchants Ass’n v. Sidamon-Eristoff , 669 F.3d 374, 389 (3d Cir. 2012)). Two federal courts have thus agreed that Kalshi is entitled to a preliminary injunction. Defendants offer no reason for this Court to break with that consensus and expose Kalshi to irreparable harm while this case proceeds. Defendants do not dispute that Congress granted the CFTC exclusive jurisdiction to regulate trading on designated contract markets (“DCMs”), or that subjecting DCMs to state regulation would conflict with this uniform federal regulatory scheme. Defendants instead devote most of their preemption argument to the proposition that Kalshi’s sports event contracts do not fall within the CFTC’s jurisdiction because they are not “swaps.” That proposition is incorrect. Congress defined swaps to include event contracts, and the Special Rule enacted by Congress in 2010 contemplates that event contracts involving “gaming” are permissible swaps
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