Robinhood's $695 Platinum Card Targets Amex — But the Math Gets Weird Fast

Daniel Wallach@WALLACHLEGAL

4d

The third court in a prediction markets case to recognize the "strong presumption against preemption" in a field (i.e., gambling) traditionally regulated by states. Joins the Maryland federal court and Massachusetts Superior Court in applying that presumption.

Daniel Wallach@WALLACHLEGAL

4d

Judge Morrison's analysis: 1) "By enacting the CEA, Congress sought to serve the national public interest of “managing and assuming price risks, discovering prices, or disseminating pricing information” by establishing a system to deter market disruptions, ensure financial integrity, avoid systemic risk, protect market participants from fraud and abuse, and promote responsible innovation." 2) "These goals are better achieved when a 'swap' is understood as a transaction involving financial instruments and measures that traditionally and directly affect commodity prices. Currency exchange rates, the weather, and energy costs all do that; the number of points scored in the Huskies-Bobcats game does not." 3) "This conclusion is further supported by the Court’s obligation to avoid absurdity. Ohio argues that absurd results would flow from defining a “swap” to include a sports-event contract. The Court agrees. The CEA makes it “unlawful for any person. . . to enter into a swap” outside of a DCM. 7 U.S.C. § 2. Under Kalshi’s construction, a sports-event contract is a swap because it is a contract for payment based on the outcome of a sporting event. But if that is true, then all contracts for payment based on the outcome of a sporting event—all sports bets— would be forced onto DCMs like Kalshi and every sportsbook in the country would be put out of business. In the absence of congressional intent to effect such a sea change, that result is absurd." 4) "As the Hendrick II court aptly described it, Kalshi’s argument boils down to this: “if contracts are not traded on an exchange, then they are not swaps that must be traded on an exchange.” Like the District of Nevada, this Court finds Kalshi’s logic 'self-fulfilling, circular, and inconsistent with the statutory text.'” 5) "What’s more, the CEA’s legislative history indicates that at least some members of Congress believed that sports-event contracts would not be considered swaps. During a July 15, 2010 exchange with Senator Diane Feinstein, Senator Blanche Lincoln (who, as Chair of the Senate Agricultural Committee, was a principal contributor to the Dodd-Frank Wall Street Reform and Consumer Protection Act) acknowledged that “[i]t would be quite easy to construct an ‘event contract’ around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament”—but that “[t]hese types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling.”

Daniel Wallach@WALLACHLEGAL

4d

Tribes are 5-0 as amicus curiae. - MD - NV x 3 - OH States are 2-0 with outside counsel (NV & OH).

Daniel Wallach@WALLACHLEGAL

4d

6 wins for states (MD, NVx3, MA & OH) and only 2 for PMs (NJ & TN) is a pretty good mix for the states. Batting .750.