Case 1:25-cv-01283-ABA Document 29 Filed 05/19/25 Page 7 of 17
Defendants claim (at 14) that Kalshi’s position would result in an “administrative nightmare” because it would require the CFTC to “undertake a case-by-case inquiry as to whether a particular sporting event is likely to have sufficient economic consequences.” But whether an event has potential economic consequences is built into the broad definition of a swap irrespective of whether the swap relates to gaming, see 7 U.S.C. § 1a(47)(A)(ii), and there is no indication this scheme has created administrability challenges in other contexts. And the statute’s broad reference to “potential” economic consequences means that the CFTC need not ask whether any particular event in fact yielded economic consequences, but instead whether it is the sort of event capable of yielding economic consequences. Defendants rely on several canons of statutory interpretation to support their view that sports event contracts cannot be swaps. Defendants’ deployment of these canons ignores the direct evidence of congressional intent in the broad definition of a swap and the text of the Special Rule. In any event, the canons do not support Defendants. Defendants first suggest (at 15) that Kalshi’s position “would impliedly repeal several federal statutes.” Not at all. Both the Wire Act and the Indian Gaming Regulatory Act (“IGRA”) continue to govern—just not as applied to event contracts listed on DCMs. Defendants identify no authority holding that Kalshi’s event contracts violate these federal statutes, nor could they. The Wire Act’s “safe harbor” for “wagering” “to and from states” where that activity “is lawful,” W. Flagler Assocs., Ltd. v. Haaland , 71 F.4th 1059, 1069 (D.C. Cir. 2023), applies here because Maryland’s laws are preempted, meaning that Kalshi’s contracts are lawful in Maryland. And IGRA’s regulation of gaming “on Indian lands,” 25 U.S.C § 2701, easily coexists with the CFTC’s exclusive
event, not just the event’s occurrence, can have significant economic consequences. The distinction between an event and its outcome gets Defendants nowhere.
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