\u201cThe presumption against preemption, therefore, applies to this case, and the Court must analyze whether Kalshi has demonstrated that, in enacting the CEA, it was the \u2018clear and manifest purpose of Congress\u2019 to preempt New York\u2019s authority to regulate gambling where a DCM, like Kalshi, offers sports-event contracts on its platform,\u201d Torres wrote.<\/p>\n
No clear intent from Congress to preempt<\/p>\n
Torres does not see any clear intent from Congress to preempt New York gambling laws. While the CEA gives the CFTC exclusive jurisdiction over transactions involving swaps on a DCM, it says this power does not \u201csupersede or limit the jurisdiction at any time conferred on\u2026 other regulatory authorities under the laws of the United States or of any State.\u201d<\/p>\n
\u201cThis provision evinces Congress\u2019 intent to leave room for states to regulate certain activities that may have otherwise been covered by the CEA\u2026 Moreover, given that the power to regulate gambling is a traditional police power exercised by New York, the Court also declines to interpret the CEA\u2019s grant of exclusive jurisdiction as leaving \u2018no room for supplementary state legislation,\u2019\u201d Torres wrote.<\/p>\n
Congress specifically prohibited states from applying gambling laws to swaps in certain limited circumstances, and similarly prohibited state regulation of swaps in insurance contracts and other contexts, Torres wrote. These provisions demonstrate \u201cCongress\u2019 intended scope of preemption\u201d and provide evidence that \u201cCongress did not intend to regulate so broadly as to exclude all state gambling laws from regulating transactions involving swaps,\u201d she wrote.<\/p>\n
Kalshi also hasn\u2019t proven that enforcement of New York gambling laws would prevent the federal government from achieving the purposes of the Commodity Exchange Act, Torres found. \u201cKalshi has not shown that it is impossible to comply with both New York gambling laws and the CEA,\u201d she wrote.<\/p>\n
The legal battle over state regulation of prediction markets is proceeding at various district courts and circuit appeals courts around the US. In another lawsuit filed by Kalshi, the US Court of Appeals for the 3rd Circuit ruled<\/a> in April that New Jersey cannot regulate sports bets on prediction markets.<\/p>\n