The U.S. Commodity Futures Trading Commission (CFTC) has raised concerns over a potential surge in election-related betting and has requested an appeals court to extend the halt on Kalshi's political prediction market. In a statement, the CFTC highlighted that the ruling by the district court has been interpreted by Kalshi and others as a green light for election-based wagering, sparking fears of widespread betting activity.
Recently, federal judge Jia Cobb from the District of Columbia delivered a ruling stating that the CFTC did not possess the authority to carry out a "public interest review" that would prevent Kalshi from launching a political prediction market in the U.S. Judge Cobb clarified that the contracts proposed by Kalshi were not associated with illegal activity or gambling but rather with political events, which fall outside the CFTC's jurisdiction. Furthermore, Congress had previously revoked the CFTC's ability to review certain types of futures contracts, except in cases involving gambling or terrorism.
Following this decision, Interactive Brokers, a major Wall Street firm, announced plans to offer election-related contracts through a CFTC-regulated affiliate. The CFTC expressed concern that unless the U.S. Court of Appeals for the District of Columbia grants an extension on Kalshi's suspension, other exchanges under CFTC oversight might follow suit.
The CFTC reiterated its stance, warning that an increase in election betting on U.S. futures exchanges could pose risks to the public interest. They cited potential issues such as market manipulation and threats to the integrity of the electoral process, emphasizing the need for a careful review before allowing such markets to operate.
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