Court Weighs CFTC's Challenge Against Kalshi's Political Betting Markets
TL;DR
- The appeals court is reviewing a ruling that allowed Kalshi to offer political prediction markets, amid concerns from the CFTC about market manipulation.
- CFTC General Counsel warned that such markets could undermine public trust in democracy, while Kalshi's attorney argued for the benefits of a regulated environment.
The recent appeals court hearing featured intense questioning of the U.S. Commodity Futures Trading Commission (CFTC) and prediction-betting platform Kalshi regarding political prediction markets. The judges did not indicate their position on whether to permit Kalshi to offer these products while they review a previous ruling that allowed the company to proceed. This discussion highlights the complexities of regulating such markets, especially during U.S. elections.
CFTC General Counsel Rob Schwartz criticized the lower court's ruling as "seriously flawed," expressing concerns that political prediction markets could lead to high-stakes betting that threatens public trust. He emphasized the risk of market manipulation due to unreliable information, contrasting these markets with other futures contracts based on objective indicators.
In response, Kalshi's attorney, Yaakov Roth, argued that a regulated market would enhance transparency and reduce manipulation risks compared to unregulated foreign platforms. The CFTC must demonstrate that allowing Kalshi to list its contracts would cause "irreparable harm." The hearing underscored the ongoing debate about regulation, market integrity, and the future of political betting in the U.S.
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