A federal judge this week sided with the prediction market Kalshi’s motion for summary judgment in its legal battle with the U.S. Commodity Futures Trading Commission (CFTC). This decision opens the door for U.S. citizens to place bets on the upcoming November election. However, the ruling isn’t the final word just yet, as the CFTC can still appeal. Following the judge’s order, the commodities regulator immediately filed an emergency request for a two-week stay.
Kalshi’s Legal Victory Could Change U.S. Election Betting Landscape, CFTC Files Emergency Motion
In a legal twist last year, Kalshi, a financial exchange and prediction market, took the Commodity Futures Trading Commission (CFTC) to court. Kalshi, established in 2018 by Tarek Mansour and Luana Lopes Lara, allows users to trade on real-world event outcomes. The lawsuit, filed in November 2023, challenged the CFTC’s decision to block the company from offering specific event contracts, particularly those related to betting on the U.S. election, on its federally regulated platform.
On Sept. 6, 2024, Judge Jia Cobb delivered a decision in favor of Kalshi, rejecting the CFTC’s cross-motion for summary judgment. Bloomberg Law reported that Kalshi’s CEO, Tarek Mansour, called the ruling a milestone. “Election markets are now legal in the United States for the first time in 100 years,” Mansour remarked. On the firm’s website, it states:
Election markets are coming to Kalshi. We did it! Stay tuned for more info, and God bless America!
Paradigm’s vice president of government affairs, Alexander Grieve, shared on X that he was delighted his firm supported the amicus. “Proud Paradigm contributed an amicus in this case, as (if it wasn’t clear already) the outcome of November’s election will have profound impact on the direction of crypto in this country,” Grieve said. “American companies need the ability to hedge political risk,” the Paradigm executive added.
Right after the verdict, the CFTC swiftly filed an emergency motion requesting a two-week stay. They argued that “without the benefit of the court’s reasoning, the CFTC is unable to make an informed decision whether to appeal, nor is it able to fully brief a motion for stay pending any forthcoming appeal.” The regulator further added:
Time is of the essence in the issuance of a stay. The CFTC expects that Plaintiff Kalshi will immediately list the relevant election contracts and that trading will begin as soon as the contracts list. Plaintiff has already announced on its homepage that ‘Election Markets are Coming to Kalshi!’
The news arrives at a moment when Polymarket, a blockchain-powered prediction platform, has seen a significant increase in volume and open interest, thanks to the upcoming 2024 election. Meanwhile, U.S. lawmakers, including Democratic Senator Elizabeth Warren from Massachusetts, have been pressing the CFTC to crack down on election prediction markets. “The last thing that voters heading to the polls need are bets waged on the outcome of that election,” the policymaker’s letter argued.
What do you think about Kalshi’s win this week and the chance the CFTC may appeal the decision? Share your thoughts and opinions about this subject in the comments section below.
