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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 1 of 39
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`ORAL ARGUMENT SCHEDULED FOR JANUARY 17, 2025
`No. 24-5205
`
`United States Court of Appeals
`For the District of Columbia Circuit
`
`KALSHIEX LLC,
`Appellee,
`v.
`U.S. COMMODITY FUTURES TRADING COMMISSION,
`Appellant.
`
`On Appeal from the U.S. District Court
`for the District of Columbia
`Case No. 1:23-cv-03257-JMC (Hon. Jia M. Cobb)
`APPELLANT’S REPLY BRIEF
`
`Robert A. Schwartz
`General Counsel
`Anne W. Stukes
`Deputy General Counsel
`Raagnee Beri
`Margaret P. Aisenbrey
`Senior Assistant General Counsels
`Conor B. Daly
`Counsel
`U.S. COMMODITY FUTURES
`TRADING COMMISSION
`1155 21st Street, N.W.
`Washington, D.C. 20581-0001
`Phone: (202) 418-5986
`Email: rberi@cftc.gov
`
`December 5, 2024
`
`

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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 2 of 39
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`
`
`TABLE OF CONTENTS
`
`GLOSSARY ............................................................................................................ vii
`
`INTRODUCTION ..................................................................................................... 1
`
`SUMMARY OF THE ARGUMENT ......................................................................... 4
`
`ARGUMENT ............................................................................................................. 5
`
`A. “Involve” encompasses a variety of connections between contracts or
`transactions and enumerated activities ............................................................ 5
`B. “Gaming” is not limited to “games” .............................................................. 11
`1. “Gaming” and “gambling” are interchangeable. ...................................... 12
`2. There is no basis to confine “gaming” to games or events with no
`outside economic effects. ......................................................................... 16
`3. Kalshi argues against a strawman construction of gaming. ..................... 18
`4. Gaming includes wagering on a contest of others. ................................... 21
`C. “Activity that is unlawful under . . . State law” applies to conduct that is
`unlawful under state laws that are not preempted by the CEA ..................... 23
`1. Kalshi incorrectly asserts that the Commission’s reasoning can be
`interpreted to capture “nothing.” .............................................................. 24
`2. Kalshi incorrectly asserts that the Commission’s reasoning captures
` “the universe of event contracts.” ............................................................ 25
`3. The enumerated categories in Section 5c(c)(5)(C) defer to state interests
`and act as a check on socially destructive activity ................................... 27
`
`CONCLUSION ........................................................................................................ 28
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 3 of 39
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`TABLE OF AUTHORITIES
`
`Cases
`
`Arizona v. Inter Tribal Council of Arizona, Inc.,
` 570 U.S. 1 (2013) .................................................................................................. 28
`*Bankamerica Corp. v. United States,
` 462 U.S. 122 (1983) .......................................................................................... 8, 11
`Baystate Franklin Medical Center v. Azar,
` 950 F.3d 84 (D.C. Cir. 2020) ................................................................................ 19
`Clark v. Martinez,
` 543 U.S. 371 (2005) ............................................................................................ 8, 9
`Consumer Electronics Association v. FCC,
` 347 F.3d 291 (D.C. Cir. 2003) .............................................................................. 17
`Electric Energy, Inc. v. EPA,
` 106 F.4th 31 (D.C. Cir. 2024) ............................................................................... 19
`Guedes v. ATF,
` 920 F.3d 1 (D.C. Cir. 2019) .................................................................................... 6
`Gustafson v. Alloyd Co.,
` 513 U.S. 561 (1995) ................................................................................................ 8
`Loper Bright Enterprises v. Raimondo,
` 144 S. Ct. 2244 (2024) ...................................................................................... 6, 19
`McCullen v. Coakley,
` 573 U.S. 464 (2014) .............................................................................................. 12
`Mercy Hospital, Inc. v. Azar,
` 891 F.3d 1062 (D.C. Cir. 2018) ............................................................................ 22
`Michigan v. Bay Mills Indian Community,
` 572 U.S. 782 (2014) ........................................................................................ 14, 28
`NLRB v. Bell Aerospace Company Division of Textron, Inc.,
` 416 U.S. 267 (1974) .............................................................................................. 20
`Oncale v. Sundowner Offshore Services, Inc.,
` 523 U.S. 75 (1998) ................................................................................................ 17
`
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`Pinson v. DOJ,
` 964 F.3d 65 (D.C. Cir. 2020) ................................................................................ 11
`Prison Legal News v. Samuels,
` 787 F.3d 1142 (D.C. Cir. 2015) ............................................................................ 12
`Reno v. Bossier Parish School Board,
` 528 U.S. 320 (2000) ................................................................................................ 8
`Rumsfeld v. Forum for Academic and Institutional Rights,
` 547 U.S. 47 (2006) ................................................................................................ 12
`*SEC v. Chenery Corp.,
` 332 U.S. 194 (1947) .............................................................................................. 19
`Southwest Airlines Co. v. Saxon,
` 596 U.S. 450 (2022) ................................................................................................ 7
`United States v. Edge Broadcasting Co.,
` 509 U.S. 418 (1993) .............................................................................................. 12
`United States v. Radley,
` 632 F.3d 177 (5th Cir. 2011) ................................................................................ 10
`United States v. Santos,
` 553 U.S. 507 (2008) ................................................................................................. 9
`U.S. Code
`
`Title 5
` Section 706 ............................................................................................................ 20
`Title 7
` Section 1a(15)(A), CEA Section 1a(15)(A) ......................................................... 11
` Section 2(g), CEA Section 2(g) ............................................................................ 10
` *Section 7a-2(c)(5)(C), CEA Section 5c(c)(5)(C) ...................................... 6, 11, 27
` Section 7a-2(c)(5)(C)(i), CEA Section 5c(c)(5)(C)(i) ............................................ 3
` Section 7a-2(c)(5)(C)(ii), CEA Section 5c(c)(5)(C)(ii) ........................................ 11
`Title 25
` Section 2703(6) ..................................................................................................... 14
` Section 2703(7) ..................................................................................................... 14
` Section 2703(8) ..................................................................................................... 14
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 5 of 39
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`Title 31
` Section 5362(1)(A) ............................................................................................... 15
` Section 5362(10) ................................................................................................... 15
`
`Other Authorities
`
`Event Contracts, 89 Fed. Reg. 48,975 (proposed May 10, 2024),
` https://www.cftc.gov/media/10706/votingcopy051024_
` EventContracts/download ..................................................................................... 20
`156 Cong. Rec. S5906-07, 2010 WL 2788026 (daily ed. July 15, 2010) ...... 3, 17, 27
`N.M. Att’y Gen. Op. 17-2, Regulation of Gambling in the Town of Silver City
` (Feb. 7, 2017), 2017 WL 1901888 ........................................................................ 16
`Del. Code Ann. tit. 11, § 1403(1) ............................................................................ 22
`Fla. Stat. § 849.14 .................................................................................................... 22
`Ky. Rev. Stat. Ann. § 528.010(6)(a) ........................................................................ 22
`La. Stat. Ann. § 14:90(A)(1)(a) ............................................................................... 23
`La. Stat. Ann. § 27:205 ............................................................................................ 15
`La. Stat. Ann. § 27:205(11)(a) ................................................................................. 15
`Mass. Gen. Laws ch. 23K, § 2 ................................................................................. 15
`Miss. Code Ann. § 75-76-5(l) ................................................................................. 16
`Mont. Code Ann. § 30-9A-102 ................................................................................ 25
`Nev. Rev. Stat. § 293.830 ........................................................................................ 26
`N.J. Stat. Ann. § 12A:9-102 ..................................................................................... 25
`N.J. Stat. Ann. § 19:34-24 .................................................................................. 26, 28
`N.Y. Penal Law § 225.00(2) .................................................................................... 21
`N.Y. Rac. Pari-Mut. Wag. & Breed. Law § 1301(20) ............................................. 16
`Utah Code Ann. § 76-10-1101(8)(a) ........................................................................ 22
`@Kalshi, X (Oct. 28, 2024, 4:31 PM), pic.x.com/lDr2PCEMV1 ............................. 1
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 6 of 39
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`@Kalshi, X (Oct. 23, 2024, 3:03 PM), pic.x.com/BCetey1esB ................................ 1
`Brant James, Court Confirms Kalshi Election Betting, GAMING TODAY
` (Oct. 3, 2024), https://www.gamingtoday.com/news/court-confirms-kalshi-
` election-betting/ ...................................................................................................... 2
`Brant James, Kalshi Adds Restrictions to Political Betting Markets, GAMING
` TODAY (Oct. 9, 2024), https://www.gamingtoday.com/news/kalshi-adds-
` restrictions-to-political-betting-markets/ ................................................................ 2
`Dan Mangan, Kalshi expands Trump, Harris election bet options,
` adds Senate races, CNBC (Oct. 9, 2024),
` https://www.cnbc.com/2024/10/09/kalshi-expands-election-betting-options-
` cftc-complains.html................................................................................................. 3
`Devin O’Connor, Election Betting Markets Draw Ire of State Gaming
` Regulators Ahead of November 5, CASINO.ORG (Nov. 4, 2024),
` https://www.casino.org/news/election-betting-markets-draw-ire-state-
` gaming-regulators ............................................................................................ 2, 26
`Election Contracts: Kalshi vs Robinhood, KALSHI,
`https://kalshi.com/blog/article/election-contracts-kalshi-com-vs-robinhood (last
`visited Dec. 6, 2024) .............................................................................................. 2
`Jess Marquez, Harris, Trump, everything in between: Kalshi explodes with
` political futures, IGAMING BUSINESS (Oct. 15, 2024),
` https://igamingbusiness.com/finance/kalshi-event-contract-politics ..................... 2
`Trade Election Parlay Contracts, KALSHI, https://kalshi.com/live/election-parlays
`(last visited Dec. 5, 2024). ..................................................................................... 1
`U.S. Election 2024, KALSHI, https://kalshi.com/events/politics/us-elections (last
`visited Dec. 5, 2024). ............................................................................................. 1
`U.S. Legal Sports Betting, FANDUEL, https://www.fanduel.com/legal-sports-
` betting-us-map (last visited Dec. 5, 2024) .............................................................. 1
`Which party will win the House, KALSHI,
`https://kalshi.com/markets/controlh/house-winner (last visited Dec. 5, 2024) .... 3
`Who will win the popular vote, KALSHI,
`https://kalshi.com/markets/popvote/popular-vote-winner (last visited Dec. 5,
`2024) ..................................................................................................................... 3
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 7 of 39
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`Contest, MERRIAM-WEBSTER.COM, https://www.merriam-
`webster.com/dictionary/contest (last visited Dec. 5, 2024) ................................. 21
`Contest, OXFORD ENGLISH DICTIONARY (2024),
`https://www.oed.com/dictionary/contest_v?tab=factsheet#8440927 .................. 21
`Gaming, AMERICAN HERITAGE DICTIONARY (5th ed. 2022),
` https://www.ahdictionary.com /word/search.html?q=gaming .............................. 13
`Gaming, BLACK’S LAW DICTIONARY (12th ed. 2024) ............................................. 13
`Gaming, CHAMBERS DICTIONARY (13th ed. 2014),
` https://www.chambers.co.uk/ search/?query=gaming&title=21st ....................... 12
`Gaming, MERRIAM-WEBSTER.COM,
` https://www.merriamwebster.com/dictionary/gaming
` (last visited Dec. 5, 2024) ..................................................................................... 13
`Gaming, OXFORD ENGLISH DICTIONARY (2024),
` https://www.oed.com/dictionary/gaming_n?tab=meaning_and
` _use&tl=true .......................................................................................................... 13
`Gamble, MERRIAM-WEBSTER.COM, https://www.merriam-
` webster.com/dictionary/gamble (last visited Dec. 5, 2024) ................................. 13
`Gamble, OXFORD ENGLISH DICTIONARY (2024),
` https://www.oed.com/dictionary/gamble_v?tab=factsheet#3430238 .................. 14
`
`*Authorities chiefly relied on are marked with an asterisk.
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 8 of 39
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`GLOSSARY
`CEA – Commodity Exchange Act, 7 U.S.C. § 1, et seq.
`
`CFTC or Commission – U.S. Commodity Futures Trading Commission
`
`Contracts – Congressional Control Contracts
`
`DCM – Designated Contract Market
`
`IGRA – Indian Gaming Regulatory Act, 25 U.S.C. § 2701, et seq.
`
`Kalshi – KalshiEx LLC
`
`Special Rule – CEA Section 5c(c)(5)(C), 7 U.S.C. § 7a-2(c)(5)(C)
`
`UIGEA – Unlawful Internet Gambling Enforcement Act, 31 U.S.C. § 5361, et seq.
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 9 of 39
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`INTRODUCTION
`
`Once this Court lifted its administrative stay, Kalshi promptly turned its
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`futures exchange into an online casino. Almost immediately, Kalshi erected a
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`giant billboard on the Las Vegas strip, declaring that “Kalshi odds are LIVE” and
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`inviting casino-goers to “Bet the election.”1 After telling the Court that its
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`contracts do not involve gaming because “elections have enormous economic
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`effects” while gaming is “for amusement, for diversion or sport,” Stay OA Tr. at
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`64-65, Kalshi listed scores of election bets that fail its own test, like “Popular vote
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`margin of victory?”; “Tipping point in the presidential election?”; and “Will Nate
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`Silver correctly call the presidential election winner?”2 It listed dozens of “Parlay
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`Contracts,”3 as though its futures exchange were a racetrack. Kalshi’s CEO
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`bragged when Kalshi “lapped FanDuel in the App Store top 100,” proclaiming that
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`“[b]etting on politics is now more popular than betting on sports.”4 All told,
`
`
`1 @Kalshi, X (Oct. 28, 2024, 4:31 PM), pic.x.com/lDr2PCEMV1.
`2 U.S. Election 2024, KALSHI, https://kalshi.com/events/politics/us-elections (last
`visited Dec. 5, 2024).
`3 Trade Election Parlay Contracts, KALSHI, https://kalshi.com/live/election-parlays
`(last visited Dec. 5, 2024).
`4 @Kalshi, X (Oct. 23, 2024, 3:03 PM), pic.x.com/BCetey1esB. Perhaps this is
`because FanDuel’s offering is illegal in several states, while the district court
`stripped all states of their power to regulate Kalshi’s gambling operation. U.S.
`Legal Sports Betting, FANDUEL, https://www.fanduel.com/legal-sports-betting-us-
`map (last visited Dec. 5, 2024).
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 10 of 39
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`Kalshi has listed at least one hundred election gambling contracts.5 For its efforts,
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`the company has been covered extensively by Gaming Today,6
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`iGamingBusiness.com,7 and Casino.org.8
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`Kalshi persists in claiming that “[e]lection prediction markets are … for
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`hedging economic risks associated with politics” (Kalshi Br. 2), but its actions
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`show the company has never been serious in that assertion. The Congressional
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`Control Contracts were a Trojan horse to facilitate Kalshi’s transformation into a
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`large-scale election gambling market, with the appearance of federal imprimatur,
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`but without the pretense of any relationship to “hedging economic risks” or
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`consistency with the CEA’s purposes. According to Kalshi’s CEO, this expansion
`
`
`5 Election Contracts: Kalshi vs Robinhood, KALSHI,
`https://kalshi.com/blog/article/election-contracts-kalshi-com-vs-robinhood (last
`visited Dec. 5, 2024).
`6 Brant James, Court Confirms Kalshi Election Betting, GAMING TODAY (Oct. 3,
`2024), https://www.gamingtoday.com/news/court-confirms-kalshi-election-
`betting/; Brant James, Kalshi Adds Restrictions to Political Betting Markets,
`GAMING TODAY (Oct. 9, 2024), https://www.gamingtoday.com/news/kalshi-adds-
`restrictions-to-political-betting-markets/.
`7 Jess Marquez, Harris, Trump, everything in between: Kalshi explodes with
`political futures, IGAMING BUSINESS (Oct. 15, 2024),
`https://igamingbusiness.com/finance/kalshi-event-contract-politics.
`8 Devin O’Connor, Election Betting Markets Draw Ire of State Gaming Regulators
`Ahead of November 5, CASINO.ORG (Nov. 4, 2024),
`https://www.casino.org/news/election-betting-markets-draw-ire-state-gaming-
`regulators.
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 11 of 39
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`“was always the plan.”9 Meanwhile, Kalshi’s record in the 2024 election was
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`mixed. For all its bluster, the Contracts at issue failed to accurately predict House
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`control, and the exchange also missed badly on the popular vote for president. See
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`Which party will win the House, KALSHI,
`
`https://kalshi.com/markets/controlh/house-winner (last visited Dec. 5, 2024). Who
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`will win the popular vote, KALSHI, https://kalshi.com/markets/popvote/popular-
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`vote-winner (last visited Dec. 5, 2024). Overall, these markets served no clear
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`purpose beyond entertainment and speculation.
`
`Congress never sanctioned any of this. Concerned with “gambling through
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`supposed ‘event contracts,’” 156 Cong. Rec. S5906-07 (daily ed. July 15, 2010),
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`Congress granted the CFTC broad discretion to evaluate “agreements, contracts, or
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`transactions [that] involve” “gaming” or “activity that is unlawful under any . . .
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`State law,” for consistency with the public interest. 7 U.S.C. § 7a-2(c)(5)(C)(i).
`
`The Commission correctly determined that Kalshi’s Contracts fit squarely within
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`these terms. They involve gaming because they entail gambling on the outcome of
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`a contest of others; they also involve activity that is illegal under state laws that
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`prohibit election betting, because they relate closely to that activity.
`
`This case is less a battle between Kalshi and the CFTC than a struggle
`
`
`9 Dan Mangan, Kalshi expands Trump, Harris election bet options, adds Senate
`races, CNBC (Oct. 9, 2024), https://www.cnbc.com/2024/10/09/kalshi-expands-
`election-betting-options-cftc-complains.html.
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 12 of 39
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`between Kalshi and the English language: “Involve” does not mean “involve.”
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`“Transaction” does not mean “transaction.” “Contest” does not mean “contest.”
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`And “gaming” carries a definition that Kalshi just made up.
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`The district court erroneously accepted all of this, ignited an explosion in
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`previously illegal election betting, and left the Commission holding the bag as a
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`new federal gambling regulator and potential election cop. Kalshi’s defense of the
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`decision is meager, and the district court should be reversed.
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`SUMMARY OF THE ARGUMENT
`
`At issue are the Commission’s interpretations of “involve,” “gaming,” and
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`“unlawful activity.”
`
`First, as Kalshi concedes, the term “involve” “carries its typical meaning,”
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`i.e., “to relate to, entail, etc.,” or “[t]o have as a necessary feature or consequence,”
`
`and it “can capture a range of relationships between two concepts.” (Kalshi Br. 20,
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`23, 27.) Yet the district court erroneously held that there is only one relevant
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`relationship between “agreements, contracts, or transactions” and the enumerated
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`activities—that the “underlying” event must be or closely relate to the enumerated
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`activity. That is not what the statute says. Taking a position in the Contracts
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`indisputably entails betting or gambling on elections—Kalshi’s billboard says so—
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`and betting on elections is unlawful under numerous state laws.
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`Second, the district court erred by holding that “gaming” requires a game.
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 13 of 39
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`“Gambling” and “gaming” are interchangeable terms. Ordinary definitions of
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`“gaming” include betting or wagering, without any such limitation. But the
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`Commission’s interpretation was also not boundless. Contrary to the district
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`court’s holding, the Commission did not adopt an unlimited definition of “gaming”
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`that covers betting on any contingency or swallows every event contract. It
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`determined that the Contracts here involved “gaming” because they constituted a
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`bet or wager on a contest of others, but it did not articulate a broader rule. The
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`APA did not require that, and the Commission did not need to establish the outer
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`limits of “gaming” to determine the Contracts fell squarely within the plain
`
`meaning of the term.
`
`Third, Kalshi mischaracterizes the Commission’s unlawful-activity analysis
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`as finding that trading an event contract on a DCM is unlawful. The Commission
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`found that election betting is unlawful under laws that protect state interests
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`separate from regulating trading contingent events generally. The Commission
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`focused on those state interests because the “unlawful activity” category prevents
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`DCMs from circumventing state laws that do not bar trading event contracts, but
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`prohibit betting on elections.
`
`ARGUMENT
`A. “Involve” encompasses a variety of connections between contracts or
`transactions and enumerated activities.
`
`CEA Section 5c(c)(5)(C) applies to “agreements, contracts, [or]
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 14 of 39
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`transactions” that are “based upon [an event],” if “such agreements, contracts, or
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`transactions involve” an enumerated activity. 7 U.S.C. § 7a-2(c)(5)(C). The plain
`
`meaning10 of this text is straightforward: If the underlying is an event (because the
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`instrument or transaction is “based upon” an event) and “the agreement[],
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`contract[] or transaction[] involve[s]” the activity, the Special Rule applies.
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`Kalshi cannot even decide why that is wrong. On one hand, Kalshi argues
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`that the dispute centers not on the meaning of “involve” but on what are the
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`“subject and object” of the sentence (Kalshi Br. 27) or “what has to involve what,”
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`APP. 13-14. In the next breath, however, Kalshi asserts a dispute about the
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`meaning of “involve,” claiming the Commission’s interpretation violated the
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`“consistent meaning” canon. (Kalshi Br. 28.) Whatever Kalshi is trying to say,
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`none of it is tenable.
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`
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`As to “what has to involve what,” the text is clear: “[T]he agreements,
`
`contracts, or transactions [must] involve” an enumerated activity. If the former
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`involves the latter, the Special Rule applies. The only reference to the underlying
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`is earlier in the sentence, where it says that the instrument or transaction must be
`
`
`10 Insofar as this Court determines any term is ambiguous, it should consider
`Skidmore deference which rests on an agency’s expertise and “body of experience
`and informed judgment,” Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2267
`(2024), just as it would employ any interpretive canon. Guedes v. ATF, 920 F.3d 1,
`22-23 (D.C. Cir. 2019).
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`USCA Case #24-5205 Document #2088272 Filed: 12/05/2024 Page 15 of 39
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`“based upon” an event.11 Kalshi has no direct response except to insist—without
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`textual support—that the subject of the clause at issue is “the underlying event.”12
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`Elsewhere, however, Kalshi admits (as it must) that “agreement[ or] contract”
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`refers to the “instrument itself” (Kalshi Br. 38), not the underlying or any other
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`isolated feature. Kalshi cannot have it both ways. The Special Rule applies if, at a
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`minimum, the “instrument itself” involves an enumerated activity.
`
`As to the definition of “involve,” Kalshi concedes that “involve” “carries its
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`typical meaning,” i.e., “to relate to, entail, etc.,” or “[t]o have as a necessary feature
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`or consequence,” and that it “can capture a range of relationships between two
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`concepts,” in which “even a loose relationship” will suffice. (Kalshi Br. 20, 23.)
`
`That is the Commission’s argument—if the “instrument itself” (Kalshi’s words)
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`and the enumerated activity have “even a loose relationship” (also Kalshi’s words),
`
`
`11 Kalshi admits that “involve” is broader than “based upon” (Kalshi Br. 23), but
`has nothing to say about the consequences of that—because Congress used the
`narrow term “based upon” to refer specifically to the underlying, it would violate
`the “meaningful-variation canon” to hold that “involve” also refers only to the
`underlying. See Sw. Airlines Co. v. Saxon, 596 U.S. 450, 457-58 (2022).
`12 At the same time, Kalshi suggests that the subject is the enumerated activity,
`arguing that the appropriate question is whether “the enumerated activities ‘relate
`to’ the underlying event” because this is “the only consistent and contextually
`workable” interpretation. (Kalshi Br. 27.) This is indecipherable. Kalshi seems to
`be saying, for example, that illegal activity (an enumerated activity) has to involve
`illegal activity (an event).
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`the Special Rule applies.13 And the relationships here are not loose—gaming is the
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`purpose or “essential feature or consequence” of the Contracts, and trading them
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`“relates to” illegal activity. Kalshi, focusing myopically on the underlying, has
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`never refuted that the “instrument[s] [them]sel[ves]” have the proper nexus.
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`(Kalshi Br. 39.)
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`Instead, Kalshi twists the “consistent meaning” canon articulated in cases
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`that do not apply here. Each case cited by Kalshi rejected the use of wholly
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`distinct meanings for a single term. See Clark v. Martinez, 543 U.S. 371, 378
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`(2005) (holding “may be detained” could not “both at the same time” limit
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`detention and authorize unlimited detention); Reno v. Bossier Par. Sch. Bd., 528
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`U.S. 320, 331 (2000) (rejecting use of “fundamentally different meanings”);
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`Gustafson v. Alloyd Co., 513 U.S. 561, 573 (1995) (rejecting that a “single
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`operative word means one thing in one section of the Act and something quite
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`different in another”); Bankamerica Corp. v. United States, 462 U.S. 122, 129
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`(1983) (rejecting “completely different” meanings of same phrase). In none of
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`these cases did the Supreme Court narrow a term that encompasses a “range of
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`relationships” (Kalshi Br. 27) so that it can apply only to one.
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`Kalshi attempts to curtail the application of “involve” by arguing that the
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`13 “Loose” arguably goes further than anything the Commission said, but that is
`academic because the connections here are not loose.
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`“interaction” must “remain constant” to avoid “forc[ing] the same word to perform
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`different functions.” (Kalshi Br. 25.) But the only “function” that “involve”
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`performs is to capture the “range of relationships” between “agreements, contracts,
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`or transactions” and the enumerated activities. It does so in varying ways, because
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`that is how the word “involve” “function[s].” There is also no “lowest common
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`denominator” canon, as Kalshi insists, empowering a court to narrow broad terms
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`to apply only in limited circumstances. (Kalshi Br. 28.) In Clark, the Court held
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`that where a term was read narrowly to avoid constitutional concerns when applied
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`to one class of immigrants, it had the same narrow meaning when applied to
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`another class of immigrants. 543 U.S. at 380. That was the “lowest common
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`denominator” to which the Court referred.
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`Kalshi’s real quibble is with the proposition that one thing can “involve”
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`another in a variety of ways. But that is obviously true—again, it is the term’s
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`plain meaning, as Kalshi acknowledges. (Kalshi Br. 27.) In Kalshi’s own cited
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`case, United States v. Santos, 553 U.S. 507 (2008), the Supreme Court explained
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`that applying a term to “different factual contexts” (here, to different types of
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`contracts) is “worlds apart” from giving it “different meanings.” Id. at 522. To
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`illustrate: Tennis involves a ball because you hit it back and forth. It also involves
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`viewing stands because you can sit there to watch the match. That you would not
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`sit on the ball or volley the seats does not require “toggling back and forth”
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`between inconsistent meanings of “involve.”
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`Kalshi also fights the ordinary meaning of “transaction.” The statute says it
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`is sufficient if a “transaction” involves, for example, gaming. If trading the
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`Contracts involves gaming, the Special Rule applies. Boxed in by this language,
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`Kalshi urges the Court to effectively strike “transactions” from “agreements,
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`contracts, or transactions” by synonymizing “transaction” with “agreement” and
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`“contract.” As Kalshi puts it, a transaction is “the instrument” itself. (Kalshi Br.
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`38.) But no source defines “transaction” that way. As the Commission has
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`explained (unrebutted by Kalshi), “transaction” appears throughout the CEA using
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`its ordinary meaning. (CFTC Br. 35-36.); see also United States v. Radley, 632
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`F.3d 177, 182-83 (5th Cir. 2011) (holding that “contracts, agreements or
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`transactions” in former CEA Section 2(g) covers “bids and offers,” and to conflate
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`“transaction” with “contract” or “agreement” would “embody the fundamental
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`interpretive error of extending the definition of one term in a three-term series to
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`cover the entire trio”). Kalshi observes that the terms “agreement, contract, or
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`transaction” appear frequently together in the CEA to suggest this means
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`collectively they “refer to a financial instrument itself.” (Kalshi Br. 38.) But
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`Kalshi offers no support for that interpretation of any of the provisions it cites and
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`ignores Congress’s use of “or,” which indicates the disjunctive.14 Pinson v. DOJ,
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`964 F.3d 65, 69 (D.C. Cir. 2020). A transaction is not an “instrument” in this or
`