For the past couple of months, virtually every update regarding the legality of sports-related event contract suggested that an April 30 roundtable hosted by the Commodity Futures Trading Commission (CFTC) could offer clarity.
However, it seems the roundtable is not happening after all.
Dustin Gouker’s Event Horizon newsletter reported that invitees to the event were told by the CFTC that it was canceled. The event was intended to allow the CFTC to hear from a range of regulators, tribal leaders and members of the event contract industry on the controversial sports-related event contract.
The roundtable is a part of the comment period on sports contracts, which began on Feb. 21.
The planned roundtable was supposed to offer an opportunity for conversation between two parties that are currently at odds in numerous court cases.
Kalshi has sued gaming regulators in Nevada, New Jersey and Maryland seeking the court to keep them online in those states temporarily while the courts determine who has authority over sports contracts, regulators or the CFTC.
Nevada expands argument in dismissal motion
A Nevada judge already granted a temporary injunction in Kalshi’s favor. Last week, the Nevada Gaming Control Board (NGCB) filed its motion to dismiss, which elaborated on what was a brief and rushed argument against Kalshi’s request for an injunction. At the time, NGCB warned both Kalshi and the court that its motion to dismiss would include more arguments than what was put forth in its first response.
In its full motion to dismiss, NGCB argued more than one argument, including some procedural concerns. The motion noted that the state of Nevada was not named in the suit, just the regulatory body and its individual leaders. Additionally, since the state needs to be named, it arguably has 11th Amendment immunity, per the brief.
The response also suggested that Congress never intended for the Commodity Exchange Act (CEA) of 1936 to supersede gambling laws at the state level. Nevada also argued that the sports contracts violate the Wire Act as well as the Indian Gaming Regulatory Act (IGRA). Finally, the brief suggested that the Professional and Amateur Sports Protection Act (PASPA) was an example of Congress’s intent to preempt state laws.
“Had Congress intended the exclusive jurisdiction provision of the CEA to preempt state gaming laws as Kalshi insists, the subsequent enactment of the PASPA would have been superfluous.”
Casino Association of New Jersey wants in too
While Nevada soldiers ahead, a party in New Jersey wants to file its own argument in the case against the New Jersey Division of Gaming Enforcement (DGE). The Casino Association of New Jersey has filed a motion to file an amicus brief in the case.
The motion included a proposed brief of what they wanted to introduce in the case. In it, the group takes issue with an assertion Kalshi has made that sporting events have economic consequences, a necessary qualification for something to count as a swap.
Kalshi used the example of St. Peter’s Cinderella run in the NCAA Men’s Basketball tournament in 2022. The #15 seed advanced to the Elite Eight, generating massive financial bonuses for the school and the conference with its win.
However, the casino association questioned its other example, which was the uptick in viewership when Rory McIlroy won the Masters golf tournament earlier this month. More specifically, the brief argued that the outcome did not directly result in an economic consequence, even if CBS made more money from streaming an event that went into extra holes.
The brief also noted that a Kalshi contract on which character died during Season 3 of the TV show “The White Lotus“. While the ratings of the show have economic consequences, the plot of the show is, in the casino association’s view, irrelevant to that.
It is now up to the court whether or not this brief can be filed and weighed as the court makes a decision.
