Case 1:25-cv-02152-ESK-MJS Document 15 Filed 04/18/25 Page 11 of 51 PageID: 132
PRELIMINARY STATEMENT Like many other States, New Jersey has regulated gambling for over 125 years. Plaintiff KalshiEX, LLC thinks it is exempt from those laws simply be- cause it offers sports wagers in a new format (called event contracts) on a market designated by the Commodity Futures Trading Commission (CFTC). Kalshi is wrong. There is no doubt that if the Commodity Exchange Act (CEA) applies to Kalshi’s sports wagers, Kalshi must comply with the CEA in order to list them on a CFTC-designated market. But it cannot do so in violation of state law. New Jersey has exercised its historic police powers to protect the public from unsa- vory practices by regulating sports gambling in the State, and Kalshi cannot end- run that longstanding scheme just by offering sports wagers in a different format. The company’s preliminary-injunction motion should be denied. For starters, Kalshi cannot succeed on the merits of its claim that the CEA preempts New Jersey’s Sports Wagering Act. As a threshold matter, Kalshi’s event contracts do not fall under the CEA. But even if they did, it would not matter. The CEA references state law several times. It expressly preempts certain state laws; but not sports-related event contracts at issue here. 7 U.S.C. § 16. It also makes clear that nothing else in the CEA “supersede[s] or limit[s]” state law or the jurisdiction of state courts. Id. § 2(a)(1)(A). And perhaps most im- portantly, Congress specifically intended to prohibit event contracts that imper- missibly involve, among other things, “gaming” or “activity that is unlawful un- der any Federal or State law.” Id. § 7a-2(c)(5)(C)(i)(I), (V). Far from legislating “so comprehensively” that Congress “left no room for supplementary state
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