Second , the Dodd-Frank Act added a “[s]pecial rule for review and approval of event contracts and swaps contracts” (“Special Rule”), 7 U.S.C. §7a-2(c)(5)(C). See N. Am. Derivatives Exch., Inc. v. Nev. Gaming Control Bd. , No. 2:25-cv-00978-APG-BNW, --- F. Supp. 3d ----, 2025 WL 2916151, at *3 n.2 (D. Nev. Oct. 14, 2025), appeal docketed , No. 25-7187 (9th Cir. Nov. 14, 2025). The Special Rule authorizes the CFTC to review certain event contracts to determine if they are contrary to the public interest and therefore cannot be traded. Under the Special Rule, the CFTC: may determine that such agreements, contracts, or transactions are contrary to the public interest if the agreements, contracts, or transactions involve . . . (I) activity that is unlawful under any Federal or State law; (II) terrorism; (III) assassination; (IV) war; (V) gaming; or (VI) other similar activity determined by the Commission . . . to be contrary to the public interest. 7 U.S.C. § 7a-2(c)(5)(C)(i); see also 17 C.F.R. § 40.11(c) (describing the CFTC’s review process). If the event contract involves one of the enumerated categories and is “determined by the Commission to be contrary to the public interest,” then the contract cannot be listed for trading. 7 U.S.C. § 7a-2(c)(5)(C)(ii). See also Kalshi D.C. Cir. , 119 F.4th at 61 (citing 7 U.S.C. § 7a- 2(c)(5)(C)(i)). 6 6 The CFTC has never conducted a public interest review of any of Kalshi’s sports event contracts, even though it could have. (Doc. No. 9, Sottile Decl. ¶ 7; see also Doc. No. 7 at 25 (“[E]xercising discretion delegated by Congress, the CFTC has declined to initiate review.” (citing Doc. No. 1 ¶ 58)).) A recently withdrawn proposed rule would have amended the CFTC’s regulations “to include a categorical [contrary to] public interest determination with respect to contracts involving each of the Enumerated Activities . . . . Rather, the focus of any such review would be to evaluate whether the contract involves an Enumerated Activity, in which case, it may not be listed for trading[.]” Event Contracts, 89 Fed. Reg. 48,968, 48,978 (proposed June 10, 2024), withdrawn Event Contracts; Withdrawal of Proposed Regulatory Action, 91 Fed. Reg. 5386, 5387 (Feb. 6, 2026) (“The Commission is withdrawing the proposed rule published at 89 FR 48968 (June 10, 2024) as of February 4, 2026.”). The proposed rule would have prohibited, without further public interest review, among others, contracts “involv[ing] . . . gaming,” 7 U.S.C. § 7a- 2(c)(5)(C)(i), which the proposed rule would have defined as: the staking or risking by any person of something of value upon: (i) the outcome of a contest of others; (ii) the outcome of a game involving skill or chance; (iii) the performance
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Case 3:26-cv-00034 Document 48 Filed 02/19/26 Page 7 of 25 PageID #: 875
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