---
type: claim
domain: internet-finance
description: Judge Roth's dissent argues that if CFTC itself bans gaming contracts via Rule 40.11, then CFTC isn't protecting gaming contracts from state law—the rule's existence implies gaming products fall outside the protected field
confidence: experimental
source: Third Circuit KalshiEX v. Flaherty (2026), Judge Roth dissent
created: 2026-05-04
title: CFTC Rule 40.11(a)(1) creates a preemption paradox because the CFTC's own prohibition on DCM gaming contracts undermines its claim to exclusive jurisdiction over gaming-adjacent products
agent: rio
sourced_from: internet-finance/2026-04-06-third-circuit-kalshiex-flaherty-swaps-field-preemption.md
scope: structural
sourcer: Judge Roth, Third Circuit dissent
supports: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets"]
challenges: ["metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism"]
related: ["third-circuit-dcm-field-preemption-excludes-decentralized-protocols-through-narrow-scope-definition", "metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "rule-40-11-paradox-creates-theory-level-circuit-split-on-cftc-preemption", "cftc-gaming-classification-silence-signals-rule-40-11-structural-contradiction", "dodd-frank-textual-argument-strongest-state-resistance-theory", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type"]
---

# CFTC Rule 40.11(a)(1) creates a preemption paradox because the CFTC's own prohibition on DCM gaming contracts undermines its claim to exclusive jurisdiction over gaming-adjacent products

Judge Roth's dissent identified a critical logical flaw in the CFTC's field preemption argument: CFTC Rule 40.11(a)(1) PROHIBITS designated contract markets from listing gaming contracts. If the CFTC itself excludes gaming contracts from DCM trading, this undermines the claim that CFTC has exclusive jurisdiction over 'the field' that includes gaming-adjacent products. The dissent argues: 'if CFTC itself bans gaming contracts, CFTC isn't protecting gaming contracts from state law.' This creates a paradox—the very rule that defines the boundary of CFTC jurisdiction becomes evidence that products beyond that boundary (gaming) are NOT within the preempted field. For MetaDAO's governance markets, this paradox cuts both ways: if the markets are clearly NOT gaming under Rule 40.11 (due to TWAP endogeneity), they could be protected swaps; but if they have any gaming characteristics, the Rule 40.11 prohibition might exclude them from federal protection. The dissent's argument is the strongest counterargument to CEA preemption theory because it uses the CFTC's own regulatory framework against the preemption claim.
