Case 1:25-cv-02152-ESK-MJS Document 15 Filed 04/18/25 Page 26 of 51 PageID: 147
In its brief to the D.C. Circuit, Kalshi explained that “contracts relating to games —again, activities conducted for diversion or amusement—are unlikely to serve any ‘commercial or hedging interest.’” Appellee’s Br. at 45, KalshiEX LLC v. CFTC , No. 24-5205, 2024 WL 4802698 (D.C. Cir. Nov. 15, 2024). The legis- lative history of the 2010 amendment, which added “swaps” to the CFTC’s ju- risdiction, explains why: “It would be quite easy to construct an ‘event contract’ around sporting events.” Indeed, “[t]hese types of contracts would not serve any real commercial purpose,” but instead “would be used solely for gambling.” 156 Cong. Rec. S5902-01, S5907 (July 15, 2010) (statement of Senator Lincoln). If event contracts not associated with a “potential financial, economic, or commercial consequence” were considered to be “swaps,” then any wager placed on the outcome of an event—including raffles and other games of chance—would also be considered swaps. And any casino offering sports wagers would be violating the CEA because it would be offering swaps outside of a CFTC-designated exchange on “any other board of trade, exchange, or market.” See 7 U.S.C. §§ 2(e), 6(a)(1). In that vein, because the exclusive-jurisdiction pro- vision applies to swaps outside of a CFTC-designated exchange (on “any other board of trade, exchange, or market”), Kalshi’s limitless definition of a “swap” would mean that the CFTC’s exclusive jurisdiction covers—and precludes States from regulating—large swaths of state law. That is not what Congress
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