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Under the law, swaps include event contracts, judges noted. The Dodd-Frank Act gave the CFTC discretionary power to review and prohibit six categories of contracts if it concludes any violate the public interest. Those categories include gaming contracts. So far, the CFTC \u201chas not yet acted to review or prohibit any sports-related event contracts,\u201d the ruling said.<\/p>\n
\u201cCongress gave the CFTC exclusive jurisdiction over trades on DCMs, provided for continued state regulation of trades conducted off DCMs, and recognized that while event contracts could involve gaming, the CFTC has discretionary power to review and prohibit those contracts,\u201d the majority said. \u201cThus, it was reasonable for the District Court to conclude that Kalshi was likely to succeed in showing that the Act preempts New Jersey law from reaching into Kalshi\u2019s CFTC-licensed DCM to ban sports-related event contracts.\u201d<\/p>\n
Roth\u2019s dissent acknowledged that a plain reading of the US law\u2019s \u201ctext suggests that Kalshi\u2019s sports-event contracts fit comfortably within the statutory definition\u201d of swaps. \u201cOn the other hand, we should not read statutes literally \u2018if reliance on that language would defeat the plain purpose of the statute,\u2019 or would \u2018def[y] rationality,\u2019\u201d she said. \u201cAs New Jersey argues, Kalshi\u2019s proffered definition would likely encompass virtually every kind of wager that could exist, including classic casino games and charity raffles.\u201d<\/p>\n