A federal appeals court has ruled in favor of Kalshi, allowing the prediction market platform to resume offering U.S. election betting contracts, despite objections from the CFTC.
A federal appeals court has ruled that prediction market platform Kalshi can resume offering contracts related to U.S. elections, rejecting a stay request from the Commodity Futures Trading Commission (CFTC). On Wednesday, the U.S. Court of Appeals for the District of Columbia lifted a previous halt that had blocked Kalshi from listing its election betting contracts, which allow users to wager on the outcome of political events such as which party will control Congress. The CFTC had argued that these contracts constituted gambling and were not in the public interest.
A federal appeals court just ruled that betting on U.S. elections is legal.
— TFTC (@TFTC21) October 2, 2024
Prediction markets like Kalshi will be in the spotlight as the 2024 election approaches. pic.twitter.com/lR8YqZdTCH
Judge Patricia Millett, who delivered the ruling, stated that the CFTC had failed to prove that the public would face irreparable harm if the stay was not granted, allowing Kalshi to proceed with its contracts. "The administrative stay is hereby dissolved," she wrote in the court opinion, adding that the CFTC could still pursue rulemaking to ban such contracts in the future.
Kalshi’s legal battle with the CFTC began last year when the agency denied its application to offer these election-related contracts. The platform filed a lawsuit, resulting in a lower court ruling in Kalshi's favor, which was subsequently appealed by the CFTC. The appeal centered around concerns that election betting could "incentivize the spread of misinformation," though the court ultimately ruled against the CFTC’s request for a stay.
Kalshi spokespersons have indicated that the platform is working on a timeline for resuming the election contracts, which were briefly available in September before being suspended by the court’s administrative stay.
The decision could have wide-reaching implications for U.S.-regulated prediction markets. While Kalshi was previously the only regulated prediction platform in the U.S., other platforms, such as Polymarket, have operated in the space without U.S. regulatory approval.
As U.S. elections approach, Kalshi’s ruling may set the stage for a larger discussion about the role of regulated betting markets in political events and the potential risks and benefits involved. The CFTC has not issued any further comments on the court ruling but has previously expressed intentions to propose rules that could ban political event betting altogether.
