Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 5 of 17
include “event” contracts—that is, any contract “that provides for any purchase, sale, payment, or delivery . . . that is dependent on the occurrence . . . of an event or contingency associated with a potential financial, economic, or commercial consequence.” 7 U.S.C. § 1a(47)(A)(ii). The CEA’s Special Rule in turn makes clear that Congress understood that event contracts involving the outcomes of sports events qualify as swaps. The Special Rule provides that “event contracts” and “swaps contracts” may involve “gaming,” and further requires the CFTC to approve such contracts unless they are “contrary to the public interest.” Id. § 7a- 2(c)(5)(C)(i)(V). The Special Rule thus conclusively establishes Congress’s understanding that swaps may encompass contracts involving outcomes of sports events. That is “the only workable interpretation of the special rule.” Flaherty , 2025 WL 1218313, at *5. 1 Defendants relegate (at 10 n.5) the text of the Special Rule to a footnote, contending that its reference to “event contracts” involving enumerated categories only “specif[ies] contracts that Congress wished to exclude from CFTC-designated exchanges.” But the Special Rule does not exclude gaming-related event contracts; it delegates the power to determine a gaming contract’s permissibility to the CFTC. Id. § 7a-2(c)(5)(C)(i)(V) (“The Commission may determine that such . . . contracts . . . are contrary to the public interest”) (emphasis added). The title of the Special Rule itself refers to “review and approval of event contracts” involving the enumerated categories, including gaming. Id. § 7a-2(c)(5)(C) (emphasis added). Congress thus authorized the CFTC to permit contracts on sports events that are not contrary to the public interest— exactly what the CFTC has done with Kalshi’s contracts.
1 This Court therefore need not address the question whether event contracts are also “contract[s] of sale of a commodity for future delivery” under the exclusive jurisdiction provision. See also 7 U.S.C. § 1a(19) (“excluded commodity” includes “an occurrence, extent of an occurrence, or contingency . . . that is (I) beyond the control of the parties to the relevant contract, agreement, or transaction; and (II) associated with a financial, commercial, or economic consequence”).
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