Case: 2:25-cv-01165-SDM-CMV Doc #: 34-1 Filed: 11/14/25 Page: 9 of 22 PAGEID #: 527
prohibits those categories of contracts. Id. § 7a-2(c)(5)(C)(ii). Here, as noted above, “[t]he CFTC made that public interest determination on a blanket basis when it promulgated § 40.11(a),” which prohibits event contracts related to gaming or unlawful activity under federal or state law. See N. Am. Derivatives Exch., Inc. v. Nevada ( Crypto.com ), No. 2:25-cv-978, 2025 WL 2916151, *10 (D. Nev. Oct. 14, 2025). Further, in promulgating this blanket prohibition, the CFTC acted consistently with Congress’s intent that the Special Rule prevent the usage of event contracts “to enable gambling,” particularly sports betting. 6 In fact, as Senator Lincoln—one of the principal architects of the Special Rule—explained: [It] is our intent … [that the Special Rule] prevent derivatives contracts that are contrary to the public interest because they exist predominantly to enable gambling through supposed “event contracts.” It would be quite easy to construct an “event contract” around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament. These types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling. 156 Cong. Rec. S5906–07 (daily ed. July 15, 2010). The CFTC’s announcement of § 40.11 reinforces its rationale for the blanket prohibition:
[I]ts prohibition of … “gaming” contracts is consistent with Congress’s intent [for the CEA’s Special Rule] to “prevent gambling through the futures markets” and to “protect the public interest from gaming and other events contracts.”
6 To the extent that Kalshi argues that its sports-event contracts are not gaming or “sports betting” because there is no betting against the “house,” that point must fail. A “house” participant is not a necessary element of gambling. Pari-mutuel wagering—which is a type of betting system in which all bets or wagers are placed together in a “pool” and players are betting against each other rather than a “house”—is generally considered gaming and directly mirrors what Kalshi is offering. See Ohio Rev. Code § 3775.01(O)(2) (defining “sports gaming” to include “pari-mutuel sports wagering pools”).
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