CFTC loses appeal as US court greenlights prediction markets involving elections in Kalshi case CFTC loses appeal as US court greenlights prediction markets involving elections in Kalshi case
The CFTC endured two legal loses against prediction market Kalshi, which now can resume its US election-related offerings.
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Updated: Oct. 2, 2024 at 9:40 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The United States Court of Appeals for the District of Columbia Circuit ruled that prediction markets that allow betting on US elections are legal.
The decision came in an Oct. 2 ruling that rejected an appeal made by the US Commodity Futures Trading Commission (CFTC) urging the court to issue an administrative stay in a previous ruling against the regulator in its case versus prediction market Kalshi.
The court determined that the CFTC failed to prove that the public would suffer irreparable injury from the offering of US elections-based contracts.
Tarek Mansour, founder of US-based prediction market Kalshi, shared on X:
“US presidential election markets are legal. Officially. Finally. Kalshi prevails.”
As a result, Kalshi can now resume offering US election-related contracts. Nevertheless, a new motion for a stay can be renewed if “substantiating evidence arises,” the Circuit judges highlighted.
The CFTC prohibited Kalshi from offering political-related contracts on its platform on Sept. 22, 2023, after the prediction market asked the regulator to list a contract based on which party would control the US Congress this year.
Thus, the prediction market sued the CFTC, claiming that the regulator’s prohibition was outside its authority. Judge Cobb then sided with Kalshi, leading to the motion for a stay.
A potential win for crypto platforms
US lawmakers urged a CFTC crackdown on US elections prediction markets in a letter to Chair Rostin Behnam on Aug. 5.
Among the eight legislators who signed the document were Senators Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Sheldon Whitehouse (D-RI), along with Representatives Eleanor Holmes Norton (D-DC) and Jamie Raskin (D-MD).
The document claimed that elections are not a for-profit enterprise and that enforcement action against the platforms offering these contracts would “restore trust” in the elections.
On the other hand, Congressman Richie Torres also addressed a letter to CFTC Chairman Behnam asking for the regulation of prediction markets related to elections instead of the prohibition proposed by lawmakers in August.
The recent legal win by Kalshi might favor crypto-native prediction markets, such as BET and Polymarket, in case the CFTC decides to comply with the enforcement call.
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Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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Polymarket
Polymarket is a decentralized prediction market platform that enables users to bet on world events using cryptocurrency.
Elizabeth Warren is an American politician and former academic known for being fiercely anti-Bitcoin and anti-crypto.