Case 1:25-cv-14723 Document 1 Filed 08/19/25 Page 21 of 28 PageID: 21
preemption exists where “compliance with both federal and state regulations is a physical impossibility”). F. The CEA’s Preemption of State Gaming Laws as Applied to Sports-Related Event Contracts Includes Those Opened and Traded Through Robinhood’s Platform. 53. Kalshi and Robinhood participate in transactions involving “swaps or contracts of sale of a commodity for future delivery” traded on a DCM, and these transactions therefore fall squarely within the statutory grant of exclusive jurisdiction to the CFTC. See 7 U.S.C. § 2(a)(1)(A) (granting CFTC “exclusive jurisdiction” over all “accounts, agreements . . . , and transactions involving swaps or contracts of sale of a commodity for future delivery” that are “traded or executed on a contract market designated” by the CFTC). Because it is the transaction on a regulated exchange over which the CFTC has exclusive jurisdiction, see id. , the CFTC must have jurisdiction over the entire transaction and all participants. This includes entities like Robinhood that accept orders or otherwise facilitate transactions, as well as entities like Kalshi that execute transactions. 54. If states could regulate some but not all entities relevant to these transactions, such regulation would infringe on the CFTC’s exclusive jurisdiction and fracture what Congress intended to be a uniform set of regulations for commodity futures and swaps trading. A state cannot circumvent the exclusive jurisdiction of the CFTC by enforcing state law against an entity involved in facilitating a transaction when the state has been enjoined from enforcing state law against the entity involved in executing that same transaction. Indeed, as the CFTC itself recently explained to the D.C. Circuit, “due to federal preemption, event contracts never violate state law when they are traded on a [designated contract market] .” CFTC Brief, KalshiEx LLC v. U.S. Commodity Futures Trading Comm’n , No. 24-5205, at 27, 2024 WL 4512583 (D.C. Cir. Oct. 16, 2024) (emphasis added).
21
Made with FlippingBook - Online catalogs