While neither the CEA nor the CFTC’s regulations define the term, under the Special Rule, “event contracts” include “agreements, contracts, transactions, or swaps in excluded commodities that are based upon the occurrence, extent of an occurrence, or contingency . . . by a designated contract market.” 7 U.S.C. § 7a-2(c)(5)(C)(i). Among other things, an “excluded commodity” is “an occurrence, extent of an occurrence, or contingency . . . 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). At issue in this case is whether the event contracts Kalshi offers are “swaps,” and, therefore, subject to the CEA’s grant of exclusive jurisdiction to the CFTC. ( Contrast Doc. No. 7 at 10 (“This exclusive jurisdiction extends to event contracts.” (citing 7 U.S.C. § 1a(47)(A)(ii), (iv), (vi) (the CEA’s definition of “Swap”)), with Doc. No. 34 at 21 (“Kalshi’s sports-event contracts are not ‘swaps’ under the CEA.”).) 7 2. Tennessee Sports Gaming Act The Tennessee Sports Gaming Act (the “Act”), Tenn. Code Ann. §§ 4-49-101 et seq. , authorizes sports betting in Tennessee and vests regulation, licensing, and enforcement authority with the Tennessee Sports Wagering Council (“SWC”). (Doc. No. 1 ¶ 22; Doc. No. 35, Thomas Decl. ¶¶ 5–6.) The Act requires that any sports gaming operator obtain a license before accepting wagers in Tennessee and that it pay initial and annual license fees and a privilege tax. Tenn. Code
of one or more competitors in one or more contests or games; or (iv) any other occurrence or non-occurrence in connection with one or more contests or games. 89 Fed. Reg. at 48,974. 7 Kalshi argues that its event contracts, besides being properly characterized as swaps, “are also ‘future[s]’ or ‘option[s]’ in excluded commodities, which are subject to exclusive CFTC jurisdiction.” (Doc. No. 41 at 9 n.4 (first quoting 7 U.S.C. § 2(a)(1)(A) (alterations in original); and then quoting Kalshi D.D.C , 2024 WL 4164694, at *2, for the proposition that “[e]vent contracts are subject to regulation under the CEA as ‘excluded commodities.’”).)
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Case 3:26-cv-00034 Document 48 Filed 02/19/26 Page 8 of 25 PageID #: 876
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