---
type: source
title: "Maryland's Fourth Circuit Brief: Congress Excluded Swaps from CEA Preemption in Dodd-Frank — The Sharpest Anti-Preemption Statutory Argument"
author: "ingame.com / Maryland State AG"
url: https://www.ingame.com/maryland-congress-kalshi-swaps-preemption/
date: 2026-05-01
domain: internet-finance
secondary_domains: []
format: article
status: unprocessed
priority: medium
tags: [Maryland, Fourth-Circuit, Kalshi, swaps, preemption, CEA, Dodd-Frank, event-contracts, MetaDAO-regulatory]
intake_tier: research-task
---

## Content

Maryland's Fourth Circuit brief argues that Congress deliberately excluded swaps from the CEA's state preemption framework in the Dodd-Frank Act (2010).

**Key statutory argument:**
- CEA Section 12(e)(2) originally covered swaps in its state preemption provision
- Dodd-Frank (2010) **revised Section 12(e)(2) to specifically EXCLUDE swaps** from state preemption
- Maryland: "the current Section 12(e)(2) reflects a deliberate choice by Congress to preempt the application of state and local gaming laws to certain commodity futures but **not to swaps**"
- Maryland also cites 7 U.S.C. § 16(h): Congress only expressly preempted state insurance laws for swaps — demonstrating Congress knows how to preempt when it intends to

**The statutory argument:** If Congress deliberately removed swap preemption in 2010, then state gaming laws CAN reach swaps-classified instruments. Kalshi's sports event contracts are classified as swaps. Therefore state gaming laws apply.

**Kalshi's counter:** "Mountains of authority confirm that the CEA preempts application of state law." Event contracts are regulated under exclusive CFTC jurisdiction.

**Fourth Circuit's May 7 oral argument:** This swap preemption question was a central issue before the Fourth Circuit panel.

## Agent Notes

**Why this matters:** The Maryland statutory argument has DIRECT implications for MetaDAO that go beyond the sports event contract case. If Congress intentionally excluded swaps from CEA state preemption in Dodd-Frank, then:

1. If MetaDAO conditional markets are "swaps" (the broad Dodd-Frank reading) → state gaming laws CAN reach them (no federal preemption)
2. If MetaDAO conditional markets are "event contracts" (the CEA Section 5c(c) reading) → state gaming laws MIGHT reach them (same state gambling enforcement theory as Kalshi)
3. The endogeneity argument remains MetaDAO's only clean path: fall outside BOTH "swaps" AND "event contracts" by virtue of endogenous settlement

The Maryland argument STRENGTHENS the case that the "swaps" classification is double-edged for non-DCM MetaDAO (Sessions 35-36 finding). Congress deliberately chose NOT to preempt state law for swaps. MetaDAO's non-DCM status means it can't benefit from DCM-specific preemption. And now the explicit statutory history confirms swaps preemption was intentionally limited.

**What surprised me:** The sharpness of the statutory history argument — Dodd-Frank literally deleted swap preemption from Section 12(e)(2). This is not a textual inference; it's an explicit legislative choice. Maryland's brief is stronger than I expected from the summary framing.

**What I expected but didn't find:** No governance market, futarchy, or MetaDAO mentions.

**KB connections:**
- MetaDAO conditional governance markets may fall outside CFTC event contract definition — Maryland's argument adds Dodd-Frank legislative history as confirmation that the "swaps" path is double-edged. Must add this to the claim's update.
- Sessions 35-36: "swaps classification = double-edged for non-DCM MetaDAO." This source provides the statutory basis for that conclusion.

**Extraction hints:**
- Add to TWAP endogeneity claim update: "Maryland's Fourth Circuit brief reveals that Dodd-Frank (2010) specifically deleted swaps from CEA Section 12(e)(2)'s state preemption provision, confirming that 'swaps' classification does NOT provide federal preemption protection for non-DCM MetaDAO. Congress deliberately chose this limit."
- The statutory history is clean and should be stated explicitly in the claim update.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: MetaDAO conditional governance markets may fall outside CFTC event contract definition — confirms the "swaps double-edge" with explicit statutory history from Dodd-Frank
WHY ARCHIVED: Maryland's statutory argument is the clearest sourcing for the Session 35-36 correction about swaps being double-edged for non-DCM MetaDAO
EXTRACTION HINT: This should be the cited source for the TWAP endogeneity claim update about Dodd-Frank explicitly excluding swaps from state preemption.