Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 4 of 17
protection requirements they tout have federal analogs with which Kalshi complies. There is no question that Kalshi should be regulated; the question is only by whom. Congress’s clear answer is that the CFTC’s jurisdiction is exclusive. This Court should grant a preliminary injunction. ARGUMENT A. Kalshi Is Likely To Succeed Because Maryland’s Gaming Laws Are Preempted By The CEA And Its Implementing Regulations. As both the Hendrick and Flaherty courts have held, the Commodity Exchange Act’s (“CEA”) text, purpose, history, and comprehensive framework clearly evince “congressional intent to occupy the field of regulating CFTC-designated exchanges and the transactions conducted on those exchanges.” Hendrick , 2025 WL 1073495, at *6; Flaherty , 2025 WL 1218313, at *6. The “plain and unambiguous language” of Section 2’s “exclusive jurisdiction” provision, and every other marker of congressional intent, confirm that state laws regulating transactions on DCMs are field-preempted. Hendrick , 2025 WL 1073495, at *6. Defendants’ contrary arguments cannot overcome that evidence. 1. Kalshi’s event contracts are swaps subject to the CFTC’s exclusive jurisdiction . Defendants do not dispute that Congress has preempted the field of derivatives trading on DCMs, nor do they dispute that subjecting Kalshi to concurrent state and federal law would present a direct conflict with the CFTC’s core principles. Defendants instead rest their case regarding preemption on the proposition that sports event contracts are not “swaps” within the meaning of the CEA, and therefore do not fall within the CFTC’s exclusive jurisdiction. The plain text of the CEA easily refutes Defendants’ position. Section 2 grants the CFTC “exclusive jurisdiction” over all “accounts,” “agreements,” and “transactions involving swaps ” that are “traded or executed on a contract market designated” by the CFTC. 7 U.S.C. § 2(a)(1)(A) (emphasis added). The CEA in turn defines a “swap” to
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