Case: 25-7504, 01/16/2026, DktEntry: 38.1, Page 33 of 47
with “unlawful Internet gambling.” 31 U.S.C. § 5363. But Congress wanted to make clear that this prohibition did not apply to payments made in connection with “bona fide business transactions such as secu- rities trading or buying or selling insurance contracts.” H.R. Rep. No. 109-412, pt. 1, at 10. So UIGEA carves out from the definition of “un- lawful Internet gambling” any “transaction conducted on or subject to the rules of a registered entity or exempt board of trade under the Com- modity Exchange Act.” 31 U.S.C. § 5362(1)(E)(ii). 10 Kalshi maintains that its sports wagers fall within this exception because they are listed on a CFTC-registered contract market. See D. Ct. Doc. 44, at 7-8. But federal regulations expressly prohibit that list- ing. Under 17 C.F.R. § 40.11(a), “[a] registered entity shall not list for trading” any “contract” or “swap” that “involves, relates to, or references . . . gaming[] or an activity that is unlawful under any State or Federal
10 Congress achieved this carveout by way of an intermediate defini- tion. The statute defines “unlawful Internet gambling” as a “bet or wa- ger” with certain characteristics. 31 U.S.C. § 5362(10)(A). The statute then excludes certain activities—including the CEA-related transac- tions described above—from the definition of a “bet or wager.” Id. § 5362(1)(E).
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