Case 2:25-cv-01541-JCM-DJA Document 1 Filed 08/19/25 Page 16 of 26
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which the CFTC has “exclusive jurisdiction” when “traded or executed on a [designated] contract market.” 7 U.S.C. § 2(a)(1)(A). The term “swap” includes “any agreement, contract, or transaction” that (among other things) “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.” Id. § 1a(47)(A)(ii). The term “swap” was added to the CEA in 2010 by the Dodd-Frank Act. See Pub. L. No. 111-203, §§ 721(a)(21) (adding the definition of “swap” in 7 U.S.C. § 1a(47)), 722(a)(1)(D) (adding “swaps” to the exclusive jurisdiction provision in 7 U.S.C. § 2(a)(1)), 124 Stat. 1376, 1666, 1672. Before 2010, however, the CFTC already had exclusive jurisdiction over event contracts because they are options or futures contracts. See CFTC, Concept Release on the Appropriate Regulatory Treatment of Event Contracts , 73 Fed. Reg. 25,669, 25,670 (May 7, 2008). 53. Event contracts are a type of intangible commodity that the CEA calls an “excluded commodity.” See United States v. Wilkinson , 986 F.3d 740, 745 (7th Cir. 2021) (reviewing “excluded commodities” under the CEA). An “excluded commodity” includes “an occurrence, extent of an occurrence, or contingency (other than [certain exceptions]) 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.” 7 U.S.C. § 1a(19)(iv). 54. This is precisely what the event contracts traded on Kalshi’s exchange are. Sports-related event contracts are within these statutory definitions of swaps and transactions in excluded commodities because: (i) they are binary contracts that pay out depending on the occurrence or non-occurrence of a future event that is beyond the control of the parties to the contract; and (ii) the underlying sporting events they concern have economic consequence. See KalshiEx , 2025 WL 1073495, at *5 n.3; KalshiEx (D.N.J.) , 2025 WL 1218313, at *2, *6. 55. With respect to the latter requirement, wins and losses in sporting events have obvious, significant financial consequences for the players, the teams, the owners or schools they represent, their communities, the television networks that cover the matches, and
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