jurisdiction says little about preemption of state regulation of designated contract markets. Of course state courts may retain jurisdiction over claims such as private fraud actions. See Kenneth B. Sills, 12A Tex. Jur. 3d Commodity Exchanges § 8 (2025) (“In a private action for damages based on misrepresentation and deceptive trade practices in connection with futures contracts, the [CFTC] has neither exclusive nor primary jurisdiction with respect to such claims, and the jurisdiction of the [CFTC] is not exclusive of the jurisdiction of state courts to adjudicate such claims; thus, a claimant is not required to exhaust his or her administrative remedies prior to the commencement of suit.”); Stacy L. Davis, John Kimpflen, J.D., & Karl Oakes, 7 Fed. Proc., L. Ed. § 13:68 (2025) (“[T]he availability of the reparations forum at the CFTC does not bar state court jurisdiction of commodities fraud actions based on state law.”) As for the special rule for event contract’s reference to state law, the District for the District of Columbia persuasively addressed this issue in an illustration last year. Addressing the CFTC’s position that Kalshi’s contracts concerning control of Congress involved unlawful activity because it is illegal in many states to stake money on an elections’ outcome, the court noted that many states also define unlawful gambling as staking money on an contingent outcome. KalshiEX LLC , 2024 WL 4164694, at *12. Event contracts are, by definition, staking money on the outcome of a contingent event and under the CFTC’s logic the special rule would apply to any event contract. Id. Thus the only workable interpretation of the special rule is that “unlawful under any Federal or State law” refers to the underlying event rather than the act of staking money on that event. Id. This logic is sound to me at this stage. Furthermore, even if “unlawful” refers to state gambling laws or “gaming” refers to the contracts at issue here, that would subject Kalshi to the review of the CFTC — not state regulators. See Hendrick , 2025 WL 1073495, at *6
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