Case: 3:25-cv-00698 Document #: 1 Filed: 08/20/25 Page 31 of 47
trades and earning revenue through payment for order flow, the Gaming Racket used a direct revenue-sharing model, giving Robinhood a commission payment on each contract traded. 119. In addition, the Gaming Racket members co-brand with each other, rather than Robinhood coordinating with a market maker to connect users to the Gaming Racket’s event contracts. 120. The Gaming Racket does not rely on individual-to-individual matching traditionally used for swaps trades. Instead, it uses Susquehanna International Group, LLP (“Susquehanna”) to provide liquidity by consistently taking the opposite side of trades, thereby ensuring there are always buyers and sellers available. The result is that it appears that the Gaming Racket has a “ banked house,” facilitating the continuous and smooth execution of these event contracts, which function as wagers. 121. The Gaming Racket offers sports event contracts, which Kalshi began self-certifying on January 22, 2025—in violation of both the CEA and its enforcing regulations. By enacting the CEA, Congress gave the CFTC the discretion to prohibit certain “gaming” events contracts that are against public interest. The CFTC exercised that discretion in passing Regulation 40.11. In doing so, the CFTC prohibited registered entities from listing event contracts that involve, relate to, or reference, among other things, gaming. 122. The Gaming Racket, through its member, Kalshi, ignored this complete prohibition and instead sought to self-certify these sports betting products under Regulation 40.2. In its self-certification Kalshi provided initial examples including questions such as "Will <team> win <title>?" for major sports championships, including the Super Bowl. Doing so, of course, was futile as the CTFC had prohibited registered entities from listing such products if they even referenced gaming.
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