2025, Kalshi self-certified its first sports event contracts, under the procedure the court has described above, as permitted by 7 U.S.C. § 7a-2(c)(1). ( Id. ¶ 49.) Shortly thereafter, the CFTC asked Kalshi to submit a “Demonstration of Compliance” with the CEA, which it did, and since then the CFTC has taken no further action regarding Kalshi’s thousands of sports event contracts. ( Id. ¶¶ 50–51.) Kalshi takes pains to distinguish itself from traditional sports betting. ( See Doc. No. 7 at 13 (“Kalshi is entirely different.”); Doc. No. 9, Sottile Decl. ¶ 33 (“Kalshi does not operate a sportsbook.”).) And it is different in certain respects. Unlike traditional sportsbooks, Kalshi operates an exchange on which gamblers bet against each other, rather than the house. (Doc. No. 1 ¶ 26 (“Traders exchange positions with other traders in the marketplace.”).) Thus, Kalshi does not set the odds (they are determined by the market), is not a party to the bets (the two people on either end of the bet are), and has no interest in who wins (Kalshi makes money by charging fees for each trade). 11 (Doc. No. 9, Sottile Decl. ¶ 33; see also Doc. No. 7 at 13.) In other respects, it does resemble traditional sports betting. As the defendants argue, Kalshi has marketed itself as a traditional sports betting operation. (Doc. No. 34 at 15 (citations omitted).) And, based on Kalshi’s description of its operations, although there may be differences under the hood between trading on Kalshi and placing a bet with a licensed sportsbook, for any sports-betting enthusiast unfamiliar with the CEA, it appears to the court that a user would find Kalshi’s offerings similar, if not
11 Kalshi’s model resembles, in certain respects, “pari-mutuel” wagering, common in horserace betting, wherein “wagers with respect to the outcome of a horserace are placed with, or in, a wagering pool . . . and in which the participants are wagering with each other and not against the operator.” Churchill Downs , 162 F.4th at 635 (quoting 15 U.S.C. § 3002(13) (emphasis in Churchill Downs )). In such a system, betting organizers have no stake in the outcome of the bets; rather, they take a percent of the betting pool. Id.
10
Case 3:26-cv-00034 Document 48 Filed 02/19/26 Page 10 of 25 PageID #: 878
Made with FlippingBook - Online catalogs