Case 3:25-cv-02016-VDO Document 56-1 Filed 01/16/26 Page 16 of 29
acted consistently with Congress’s intent by promulgating its blanket prohibition of event contracts involving gaming. 17 C.F.R. § 40.11(a)(1). The CFTC explained that its “prohibition of certain ‘gaming’ contracts is consistent with Congress’s intent to ‘prevent gambling through the futures markets’ and to ‘protect the public interest from gaming and other events contracts.’” Provisions Common to Registered Entities, 76 Fed. Reg. 44776, 44786 (Jul. 27, 2011) (footnotes omitted). Thus, the CFTC recognized that the Special Rule reinforced Congress’s existing policy against sports betting. Kalshi even acknowledged this fact in a brief filed with the D.C. Circuit 14 months ago (and mere weeks before launching its nationwide sports betting app). See Appellee Br. at 41, KalshiEX LLC v. CFTC , No. 24-5205 (D.C. Cir. Nov. 15, 2024) (“An event or contract thus involves ‘gaming’ if it is contingent on a game or game-related event. The classic example is a contract on the outcome of a sporting event; as the legislative history directly confirms, Congress did not want sports betting to be conducted on derivatives markets .” (emphasis added, citation omitted)). The Special Rule and the CFTC’s regulations undermine any claim that Congress intended to repeal IGRA and legalize sports betting. That the CEA and IGRA only overlap here is due to Kalshi’s backdoor attempt to evade comprehensive gaming regulations. 7 7 Under Kalshi’s theory, simply calling a sports wager a “swap”—regardless of whether it is actually a valid “swap”—and listing it for trade on a DCM automatically grants the CFTC exclusive jurisdiction, to the detriment of all other regulatory authorities. See Pl. Memo. Supp. Prelim. Inj. at 12–14, ECF No. 30-1. What, then, would prevent Kalshi from calling “contracts” on other traditional forms of gaming, like roulette and lotteries, “swaps” and subjecting them to the exclusive jurisdiction of the CFTC? In Connecticut, the Connecticut Tribes also have certain exclusivity over online casino gaming beyond just sports betting. This was again a product of thoughtful negotiations and carefully crafted agreements between the Connecticut Tribes and State pursuant to IGRA and state law. See Mashantucket Pequot Agreement, § 8; Mohegan
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