Shreyas Hariharan

“Don’t judge a book by its cover” -> everyone judges books by their cover “Don’t focus on status” -> everyone is obsessed with status “Be yourself” -> everyone is performing All advice is a confession about human nature - that the opposite behavior is near-universal

My assessment: Supreme Court will side with Kalshi and CFTC The definition of ‘swap’ in the Dodd Frank was intentionally broad Unlike the PASPA case, there's now a federal body (CFTC) that has a clear mandate to regulate swaps. So federal preemption supersedes states' rights

The case will likely make it to Supreme Court but it cuts across typical ideological viewpoints - Conservative justices are textual originalists, which favors Kalshi since the swap definition is broad. But they are also committed to states’ rights, which favors the states. - Liberal justices are typically pro-federal regulatory authority but skeptical of financial industry arguments and sympathetic to consumer protection.

"Potential financial, economic, or commercial consequence” The courts are split, and this is where the fight will be won or lost States believe economic consequences need to be significant & Kalshi doesn’t meet the bar Kalshi & CFTC believe that any economic consequences would suffice

"Associated with" Kalshi has the textual advantage: most judges think the word is broad enough. The connection between a sports event and its economic consequence need not be direct.

There are two contentious phrases in the definition of a swap that people are fighting about: - “Associated with” - “Potential financial, economic, or commercial consequence”

So what exactly is a swap? In plain English: a swap is a deal where someone gets paid based on whether something happens or doesn’t happen, as long as that thing is connected with a potential economic consequence. The Commodity Exchange Act defines it here:

But the courts across the country are split. - Kalshi won in New Jersey (appeals court), Tennessee (district court), and Northern California (district court). - States won in Ohio (district court), Massachusetts (state court), and Nevada (state court).