based on “excluded commodities,” and therefore are not under the CFTC’s exclusive jurisdiction. Under the CEA, a “swap” is defined as: [A]ny agreement, contract, or transaction . . . that provides for any purchase, sale, payment, or delivery (other than a dividend on an equity security) that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence. 7 U.S.C. § 1a(47)(A)(ii). Similarly, an “excluded commodity” means, among other things, “an occurrence, extent of an occurrence, or contingency . . . that is—(I) beyond the control of the parties to the relevant contract, agreement, or transaction; and (II) associated with a financial, commercial, or economic consequence.” Id. § 1a(19)(iv). Kalshi’s sports event contracts do not meet these definitions because they are not dependent on the occurrence or nonoccurrence of a sports event—i.e., whether the sports event occurs 8 —but rather on the outcome of the sports event—i.e., which team wins. 9 Kalshi’s sports event contracts are quite simply sports bets. Moreover, although the parties to such contracts presumably have no direct control over whether that team wins or loses, any “financial, commercial, or economic consequence” that may potentially be associated with Kalshi’s sports event contracts are related to the outcome of the games, not the occurrence or nonoccurrence of the games. In Kalshi’s own words, the games 8 An example of what could arguably be a valid “sports event contract” would be: If bad weather is threatening to cause the cancellation of a football game in Buffalo, the owner of Highmark Stadium could purchase an event contract that the Buffalo Bills will not play their Sunday game. This would allow the stadium owner to hedge against the loss of revenue in the event the football game does not occur. This type of contract is not dependent on the outcome of the Buffalo Bills’ game, but rather on the occurrence or nonoccurrence of the game. 9 Ostensibly, Kalshi presumes that the act of a particular team winning a sports game is the “event” underlying its sports event contracts—not so. The “events” at the heart of valid sports event contracts are the sports games themselves.
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