Case 1:25-cv-02152-ESK-MJS Document 15 Filed 04/18/25 Page 39 of 51 PageID: 160
the purpose and objectives of Congress). In fact, Kalshi can offer the vast major- ity of its sports-related event contracts by obtaining licensure in New Jersey. The only sports event contracts it can never offer in New Jersey are wagers on college sporting events involving New Jersey colleges or taking place in New Jersey. But the CEA’s special rule itself recognizes such state-specific prohibi- tions: event contracts may be “contrary to the public interest” and therefore pro- hibited if they involve “gaming” or “activity that is unlawful under” any “State law.” 7 U.S.C. § 7a-2(c)(5)(C)(i); 17 C.F.R. § 40.11(a)(1). So not only does the CEA say that event contracts involving gaming are contrary to the public inter- est, but it acknowledges that States may outlaw certain activity and that the CFTC should rely on state prohibitions in deciding whether an event contract can be listed on a designated contract market. New Jersey’s policy decision to prohibit a particular small subset of sports wagers—college sporting events in New Jersey or involving New Jersey col- leges—is therefore fully compatible with Congress’s objective in prohibiting transactions that involve “gaming” or are “unlawful under” any “State law.” Indeed, in litigation with the CFTC, Kalshi itself admitted that sports wagers fall within the definition of “gaming” and that Congress intended to prohibit gaming-related event contracts. See Appellee’s Br. at 41, Kalshiex LLC , 2024 WL 4802698 (“The classic example [of an event contract involving gaming] is a con- tract on the outcome of a sporting event; as the legislative history directly con- firms, Congress did not want sports betting to be conducted on derivatives mar- kets.”). New Jersey law therefore poses no obstacle to the purposes of the CEA.
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