Case 1:25-cv-14723 Document 1 Filed 08/19/25 Page 11 of 28 PageID: 11
different modes of regulation. The federal regulations that govern commodity futures and swaps trading have as a major focus creating and maintaining fair and efficient markets for trading, see 17 C.F.R. §§ 38.250, 38.151, whereas sportsbooks are regulated by state law and subject to the police powers of the state to halt and remedy any exploitation of gamblers. 31. Robinhood is registered with the CFTC as a futures commission merchant. As relevant here, an FCM is “an individual, association, partnership, corporation, or trust that is engaged in soliciting or in accepting orders for the purchase or sale of a commodity for future delivery; a security futures product; a swap” or certain other transactions and “in or in connection with [those activities], accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom.” 7 U.S.C. § 1a(28) (subsection headings omitted). FCMs must register with the CFTC unless they fall within certain exemptions. Id. § 6f; 17 C.F.R. § 3.10(c). 32. Similar to a registered DCM (such as Kalshi), registered FCMs such as Robinhood must comply with a host of federal requirements. FCMs are subject to reporting requirements to the CFTC, 17 C.F.R. §§ 1.10(b), 1.10(d), 17.00, disclosure requirements to the public, id. § 1.55, and minimum financial requirements, id. §§ 1.12, 1.17. FCMs must “establish, maintain, and enforce a system of risk management policies and procedures designed to monitor and manage the risks associated with the activities of the” FCM, id. § 1.11(c)(1), and the CFTC’s regulations set forth elements that such a risk management program must include, id. § 1.11(e), as well as reporting requirements related to risk management, see id. § 1.15. The CFTC requires FCMs to “establish and enforce internal rules, procedures and controls to” ensure compliance with certain trading standards. Id. § 155.3. FCMs must also “adopt and implement written policies and procedures” to ensure that they and their employees comply with CFTC regulations
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