Case 3:25-cv-02121-VDO Document 58-1 Filed 01/16/26 Page 16 of 29
that such agreements, contracts, or transactions are contrary to the public interest” and to disallow any “gaming” activity on DCMs at all. See 7 U.S.C. § 7a-2(c)(5)(C)(i)–(ii). The CFTC 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. Coinbase’s partner, 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 Coinbase’s backdoor attempt to evade comprehensive gaming regulations. 6
6 Under Coinbase’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 12–15, ECF No. 5-1. What, then, would prevent Coinbase from calling “contracts” on other traditional forms of gaming, like roulette and lotteries, “swaps” and
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