Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 3 of 17
unless the CFTC deems them contrary to the public interest—which the CFTC has not done here. Defendants’ position that sports events are categorically not “associated with a potential financial” consequence is mistaken. The sports events for which Kalshi offers contracts have clear financial consequences, and they certainly have potential financial consequences. The canons of interpretation that Defendants invoke do not support them and ignore direct textual evidence that contracts involving sports events fall within the CFTC’s jurisdiction. Defendants erroneously claim that Kalshi self-certified its sports event contracts in violation of a CFTC regulation. While Section 40.11(a) generally prohibits contracts involving gaming, Section 40.11(c) gives the CFTC discretion to approve such contracts on a case-by-case basis. See 17 C.F.R. § 40.11. Defendants’ reliance on Section 40.11 thus undermines their argument. By Defendants’ own admission, Section 40.11 reaffirms CFTC jurisdiction over sports event contracts. As courts have uniformly held, where “the CFTC has jurisdiction, its power is exclusive.” Chicago Mercantile Exch. v. S.E.C. , 883 F.2d 537, 548 (7th Cir. 1989). While Congress in the Special Rule noted concerns with event contracts involving gaming, Defendants fail to acknowledge Congress’s solution to those concerns. Congress did not ban gaming contracts outright, but instead delegated to the CFTC—not 50 separate states—the authority to approve or reject these contracts after public-interest review. The other injunction factors favor a modest injunction that would allow Kalshi to litigate this matter without incurring irreparable harm. Defendants do not dispute that Kalshi would suffer irreparable harm absent an injunction, but instead claim that Kalshi comes to this court with unclean hands. Quite the contrary, Kalshi’s harm results from Defendants’ intrusion into the exclusive federal domain of regulating trading on DCMs. Defendants are not entitled to tax revenue from Kalshi’s activities they have no authority to regulate, and many of the consumer-
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