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CFTC declares market emergency, orders Kalshi to continue to operate in New York

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Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#71

Post by subtlejellyfish »

xp84 wrote: post #49
Terr_ wrote: post #20

> said Chairman Michael S. Selig. “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. Ah yes, "derivatives" which are "not intended to fall under gaming laws" such as... *checks Kalshi website* 58 million dollars riding on which team is the 2027 NFL champion. Oh yeah, totally a financial derivative there, not related to gambling at all. *sigh*

ELI5 why it's better for you to place a $10,000 bet that, say, GOOG falls below $300 by February 2028, than to bet the same that the Pats win the Super Bowl? They're both gambling.

There's a legitimate, non-gambling use case: hedging against your existing position in GOOG.

There's no equivalent instrument for sports.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#72

Post by wahern »

nickff wrote: post #27
decimalenough wrote: post #4

Am I reading this right? The state of New York wants Kalshi to stop offering prediction gambling, excuse me, "event contracts" in New York, and the federal Commodity Futures Trading Commission just ordered Kalshi to keep operating in New York regardless?

Here is a link to a post about the State of New York's case: https://www.shb.com/intelligence/newsletters/securities-liti... I am not sure about how the state regulation of betting will turn out (though I would have guessed that it is indeed pre-empted), but the nationwide injunction seems shaky given Trump v Casa: https://www.supremecourt.gov/opinions/24pdf/24a884_8n59.pdf

I don't think Casa applies here. A nationwide injunction is not the same thing as a universal injunction. A universal injunction benefits non-parties to a case. But if an injunction, especially a TRO, requires nationwide effect to protect the interests of NY, who is a party, then that's fine. Also note that Kalshi is based in NYC, AFAIU; it's not a situation of a state court trying to control the out-of-state actions of a foreign company merely doing business in NY.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#73

Post by rcxdude »

xp84 wrote: post #49
Terr_ wrote: post #20

> said Chairman Michael S. Selig. “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. Ah yes, "derivatives" which are "not intended to fall under gaming laws" such as... *checks Kalshi website* 58 million dollars riding on which team is the 2027 NFL champion. Oh yeah, totally a financial derivative there, not related to gambling at all. *sigh*

ELI5 why it's better for you to place a $10,000 bet that, say, GOOG falls below $300 by February 2028, than to bet the same that the Pats win the Super Bowl? They're both gambling.

The fact that you can turn useful financial instruments into a casino isn't really a great argument for just leaning into it by abandoning all connection to any real utility.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#74

Post by Terr_ »

xp84 wrote: post #49
Terr_ wrote: post #20

> said Chairman Michael S. Selig. “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. Ah yes, "derivatives" which are "not intended to fall under gaming laws" such as... *checks Kalshi website* 58 million dollars riding on which team is the 2027 NFL champion. Oh yeah, totally a financial derivative there, not related to gambling at all. *sigh*

ELI5 why it's better for you to place a $10,000 bet that, say, GOOG falls below $300 by February 2028, than to bet the same that the Pats win the Super Bowl? They're both gambling.

I don't think I can make a good ELI5 argument for (or against) that one as-written, because there are multiple differences going on at the same time. For example:

1. When you "lose" shorting a stock your potential loss is infinite, because you might be on the hook to buy (and then give away) GOOG at an arbitrarily high price. In contrast, the super-bowl bet is probably a fixed amount.

2. In the opposite direction, it's hard to see how the Super Bowl bet can really be hedging to reduce how much you're relying on chance in your life... not unless you happen to own a store selling single-team merchandise and you want to limit how much money you might lose if nobody wants to buy it.

_________

P.S.: Let's flip it around: If we assume shorting GOOG is the same as sports-gambling, then why (AFAIK) has no bookie or casino ever even tried to offer the same kind of bet, where you get $X now but you're obligated to supply $THING later?

Does that absence tell us something about an important difference between them?

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#75

Post by anigbrowl »

brink wrote: post #33
quink wrote: post #18

Just listen to the overwhelming silence from the “states’ rights” crowd.

This has little to do with NY governing NY. NY was attempting to govern Kalshi in other states, which it doesn't have the authority to do.

Legal filings by the State of New York indicate that this was not in fact the case and they were asking Kalshi to halt offering their product to the public in the state of NY only.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#76

Post by dannyw »

decimalenough wrote: post #4

Am I reading this right? The state of New York wants Kalshi to stop offering prediction gambling, excuse me, "event contracts" in New York, and the federal Commodity Futures Trading Commission just ordered Kalshi to keep operating in New York regardless?

Yes. If you take Kalshi out of it, that’s exactly how the law is supposed to work.

The State of New York does not have the power to compel NYSE to stop operating in New York either, irrespective of what laws NY passed, as that is with the SEC.

They also can’t enforce a law saying companies in New York must file 10Qs every month or something. Again, federal.

See: supremacy clause, interstate commerce. (The latter has been significantly expanded beyond its ordinary meaning for centuries; in here, the theory is that New Yorkers not being able to participate in a market ‘hurts’ other interstate market participants).

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#77

Post by 9cb14c1ec0 »

tracerbulletx wrote: post #42
akerl_ wrote: post #15

EDIT: see DannyBee's comment below ( https://news.ycombinator.com/item?id=49266746 ). It does look like the CFTC has extrapolated the "nationwide" out of either some novel interpretation of the filing or just entirely fabricated it as their justification for their action. I've got no love for Kalshi, but "orders Kalshi to continue operate in New York" doesn't seem to be present anywhere in the actual release. The art…

That is not true? The order was to stop them from operating in the state.

You are correct, but New York also apparently sees their jurisdiction as nationwide when the thing being wagered on has some proximity to the state. If you read the petition, it has language like this:

> New York also prohibits sports wagering on events in which New York college teams participate

Ultimately, this suit is about protecting state gambling taxes and incumbent casinos. I guess I don't feel a particular love for either side.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#78

Post by decimalenough »

dannyw wrote: post #76
decimalenough wrote: post #4

Am I reading this right? The state of New York wants Kalshi to stop offering prediction gambling, excuse me, "event contracts" in New York, and the federal Commodity Futures Trading Commission just ordered Kalshi to keep operating in New York regardless?

Yes. If you take Kalshi out of it, that’s exactly how the law is supposed to work. The State of New York does not have the power to compel NYSE to stop operating in New York either, irrespective of what laws NY passed, as that is with the SEC. They also can’t enforce a law saying companies in New York must file 10Qs every month or something. Again, federal. See: supremacy clause, interstate commerce. (The latter has…

It's kind of hard to take Kalshi out of this, since the whole premise for the Commodity Futures Trading Commission's authority here is that Kalshi is a commodity futures trading exchange, not a gambling site.

Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York

#80

Post by aliasxneo »

DannyBee wrote: post #57
aliasxneo wrote: post #30

Earlier quoted context omitted.

It seems that New York is asking the court for a temporary restraining order that would prohibit Kalshi from offering all event contracts nationwide. I also have zero love for Kalshi, but I can see why such a request would be concerning, regardless of whether I think Kalshi is a degenerate trash heap.

Except it's false, they aren't requesting such a thing.

Not literally. I think the text in question is: "within or from New York or to persons in New York." Where CFTC is arguing that "from" would have interstate consequences. I'm not a legal expert, though, so I have no idea if something similar has been fought in court before.

edit

Interesting, I found KalshiEX LLC v. Flaherty [1] which seems strikingly similar to this case and was ruled in favor of Kalshi.

"The Third Circuit affirmed the District Court’s order. The appellate court held that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps, including sports-related event contracts traded on CFTC-licensed DCMs."

[1]: https://law.justia.com/cases/federal/appellate-courts/ca3/25...

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