USA Trends and Developments Contributed by: Andrea S Kramer, ASKramer Law
sions or Indian Tribal jurisdictions. The legal question turns on whether sports contracts are “betting”. In January, the CFTC struck down self-certified sports contracts by Crypto.com. The CFTC requested that it suspend listing and trading such contracts, but Crypto.com did not do so. Rather, it asserted that the CFTC’s position conflicted with the incoming Trump administration’s pro-crypto, pro-innovation stance. Sports contracts are currently trading on CFTC-regu - lated DCMs, and are trading without CFTC challenge at present. Even though sports contracts trade on DCMs, it is still not known whether they are legal. Under state gaming laws, several states are now suing DCMs that trade sports contracts. An increasing number of suits brought by Indian Tribes is also being seen. These state and Tribal actions raise more than an interesting legal wrinkle. Whether a federal pre-emption applies to sports contracts is currently being fought in various courts around the country, with seminal cases in New Jer - sey, Maryland and California. Again, Kalshi is in the fray, fighting in several venues claiming that a federal pre-emption precludes state actions, and arguing that its DCM-traded sports contracts are legally protected from challenge because the CFTC has exclusive juris - diction. In June, five friend-of-the-court (amici) briefs were filed in support of the New Jersey case against Kalshi, which Kalshi won. These amici briefs came from very powerful interests, including a coalition of Tribal organisations (nine groups and 60 individual Tribes); a coalition of attorneys general (from 34 US states, Washington, DC and the Northern Mariana Islands); and the American Gaming Association. Later, in August, a Maryland federal judge refused to grant Kalshi a preliminary injunction in a different case, concluding that the federal pre-emption does not sup - port Kalshi’s position that the CEA pre-empts state gambling and gaming laws. In its decision, the court noted that when the federal pre-emption was enact - ed, betting was illegal under federal law; therefore, Congress could not have intended to pre-empt state gaming laws. The California case involves three Indian Tribes that have raised the stakes by suing Kalshi and
its market maker Robinhood with sweeping claims, including RICO violations. Given the Trump administration’s pro-innovation posi - tion, the odds are better than even that sports con - tracts will continue to trade – that is, unless and until the state gaming regulators and the Indian Tribes have their way, and this new federally regulated sports pre - diction market is shut down. Derivatives trading on a 24/7 basis US regulated exchanges do not operate on a 24/7 basis. Rather, they are open for trading during tradi - tional designated business hours and days, keeping Federal Reserve System (Fed)/banking settlement and payment hours. This is a long-term functional con - straint that prevents 24/7 trading and clearing in the United States. As previously mentioned, crypto derivatives (like perps) trade 24/7 because they do not rely on Fedwire operating hours or current banking system conven - tions. Crypto derivatives settle in crypto rather than fiat currencies, so they can operate on a 24/7 basis. These settlement logistics deliver a major competitive advantage to crypto over traditional derivatives. It is worth looking briefly at the implications of 24/7 trading in the United States. In 2023, the Fed pro - posed to transition the wholesale funds settlement system to 24/7 operations sometime in 2027. The Fed payments infrastructure is expected to ultimately operate 22 hours of every day of the year. This would be a predicate to extending the hours of exchange operation. In April 2025, the CFTC solicited comments on the “potential benefits and risks” of 24/7 derivatives trad - ing and settlement. Key stakeholders, market par - ticipants and interested trade associations submitted comments to the CFTC, many having previously sub - mitted feedback on 24/7 to the Fed. Most comments related to systems infrastructure, technology changes and staffing changes that would be required with bank settlements over the Fedwire. Specifically, the CFTC noted the need to “main - tain robust market surveillance for abusive trading
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