Crypto-friendly lawmaker Rep. Ritchie Torres called for the U.S. Commodity Futures Trading Commission to turn its attention toward regulating election markets following a judge's ruling going against the agency.
Election markets have been around for years, but on "less secure and unregulated exchanges," the New York Democrat said in a letter sent to CFTC Chair Rostin Behnam on Thursday. Politico first reported the news.
"In light of this, the CFTC should accept the ruling and look forward," Torres wrote. "I encourage you to focus on promoting responsible innovation, regulating exchanges, protecting consumers, and safeguarding the sanctity and integrity of elections from illegal and unregulated actors."
Judge Jia M. Cobb for the U.S. District Court for the District of Columbia ruled on Thursday that the CFTC exceeded its authority when it pushed against prediction market Kalshi's move to list contracts tied to U.S. elections. The CFTC appealed that ruling later on Thursday and during a hearing warned the court that election contracts could "undermine confidence in election integrity."
Kalshi's website currently has a banner on its site that says "trading is paused on elections.kalshi.com pending court process." The CFTC said last year that Kalshi could not offer contracts related to "congressional control contracts." Kalshi then sued the agency in November 2023.
Torres urged the CFTC to consider allocating resources toward regulated entities to protect consumers and election integrity from "illegal and unregulated election markets."
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"Additionally, I encourage the CFTC to weigh the resources that further court challenges would consume, as well as the broader harm that further delays could have on election integrity and consumer protection," Torres wrote. "Delays could allow illegal and unregulated markets to continue gaining market share."
Event markets, such as Kalshi and Polymarket, allow users to bet on the outcome of future events, including on the upcoming U.S. elections or even when certain Taylor Swift albums may be released. Kalshi is regulated by the CFTC, while others, like Polymarket, do not operate in the U.S.
CFTC Chair Behnam has warned about a "significant uptick" in event contracts listed for trading on exchanges registered with the CFTC since 2021. The CFTC voted in May to propose rules banning bets on political events as those markets quickly expand ahead of November.
The CFTC did not respond to a request for comment.
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