According to Cointelegraph, the U.S. Commodity Futures Trading Commission (CFTC) said in its latest motion that the prediction market may be subject to "alarming manipulation" and pointed out that similar incidents have occurred on Kalshi's competing platform.
The CFTC mentioned that traders on Polymarket had attempted to manipulate Vice President Kamala Harris's chances of winning in the 2024 U.S. presidential election, and that "fake polls" on PredictIt also affected the price of Senator Debbie Stabenow's re-election contract.
On September 6, the CFTC lost part of its case, allowing Kalshi to offer election betting. On September 9, District Court Judge Jia Cobb issued a temporary injunction suspending Kalshi from offering U.S. election markets.
Nonetheless, the first U.S. election marketplace went live on Sept. 12, but was taken offline hours later following an appeals court injunction, said Tarek Mansour, founder of Kalshi.
In its latest filing, the CFTC supported the appeals court’s motion for an injunction and filed a notice of appeal on Sept. 12. In its Sept. 12 opinion, Cobb said the CFTC exceeded its statutory authority.
Kalshi opposed the ban, saying it would cause irreparable financial damage to the company while other unregulated platforms continue to offer similar products. The CFTC countered that Kalshi’s arguments were “naive” and said allowing more election betting could cause greater harm.
The CFTC and Kalshi case hinged on predicting whether the platform’s operations constituted “gambling” under U.S. law and thus fell under the CFTC’s jurisdiction. Cobb’s ruling was seen as a major victory for the crypto industry.