Case 1:25-cv-02152-ESK-MJS Document 15 Filed 04/18/25 Page 19 of 51 PageID: 140
of the event occurring. Id. ¶ 20. If the purchaser has chosen the “yes” position, and the event occurs, then the purchaser is paid out. Id. The payout depends on market perceptions about the likelihood of the event’s occurrence and accord- ingly fluctuates between the time of its creation and the expiration date. Id. ¶ 22. The ultimate value of the outcome is determined at the contract’s expiration date. Id. For example, an event contract may ask whether an earthquake will occur in Los Angeles County before December 31, 2025. Id. ¶ 20. If an earth- quake does occur before that date, then the purchaser of the “yes” position is entitled to its full value. Id. Among many other substantive areas, Kalshi recently began offering event contracts on the outcome of sports events. Id. ¶ 40. On January 24, 2025, Kalshi self-certified and then began offering event contracts related to the outcome of sports events on its exchange, under the guise of compliance with the CEA. Id. ¶ 41. These sports-related event contracts allow users to place positions on the outcome of sports events like which teams will advance in certain rounds of the NCAA College Basketball Championship. Id. Although the CFTC may review and prohibit event contracts involving “gam- ing” or “activity that is unlawful under any Federal or State law,” 7 U.S.C. § 7a- 2(c)(5)(C)(i)(I), (V), the CFTC has not yet taken action to review or prohibit Kalshi’s sports-related event contracts, Compl. ¶ 41. On March 27, 2025, after Kalshi began offering its sports-related event contracts, the New Jersey Division of Gaming Enforcement issued a cease and desist letter to Kalshi. Compl., Ex. 1. The Division notified Kalshi that it was offering unauthorized sports wagers to individuals located within New Jersey in
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