- Kalshi wins against CFTC, opening doors for legal U.S. election betting.
- Court’s decision challenges CFTC’s authority, setting a new precedent.
- CFTC seeks 14-day stay to evaluate possible appeal of Kalshi ruling.
On September 6, 2024, the U.S. District Court ruled in favour of Kalshi, a predictions market platform, against the Commodity Futures Trading Commission (CFTC). This ruling permits Kalshi to offer contracts related to betting on U.S. elections, a practice that has not been legally allowed for a century.
The case has been ongoing for over a year, highlighting tension between emerging financial markets and regulatory authorities.
Kalshi, a financial exchange known for offering prediction markets, clashed with the CFTC in 2023. The CFTC had previously prohibited Kalshi from providing contracts allowing users to bet on which political party would control Congress following the November 2024 elections.
Kalshi contested this decision, labelling the CFTC’s ruling as “arbitrary and capricious,” and initiated a lawsuit challenging the agency’s authority.
On September 6, Judge Jia Cobb of the U.S. District Court ruled in favour of Kalshi, overturning the CFTC’s prohibition. This ruling effectively legalizes election betting markets in the United States for the first time in a century. Tarek Mansour, Kalshi’s co-founder and CEO, confirmed this development, emphasizing the historic nature of the decision.
Following the court’s ruling, Jake Chervinsky, Chief Legal Officer at Variant Fund, highlighted the significance of this outcome, referring to it as a “Huge Win” for Kalshi. Chervinsky suggested that this case sets a precedent for other companies facing regulatory challenges, advocating for more lawsuits to counter regulatory overreach.
In response to the court’s decision, the CFTC promptly filed an emergency motion requesting a 14-day stay of the ruling. The agency argued that without the court’s full reasoning, it could not make an informed decision regarding a potential appeal.
If granted, the requested stay would prevent Kalshi from listing its election markets until at least late September. The CFTC’s motion underscores the agency’s concern over the implications of this ruling and its potential impact on the broader financial markets.
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