According to CoinDesk, the US prediction market platform Kalshi has won a federal lawsuit against the Commodity Futures Trading Commission (CFTC) and plans to offer contracts on control of Congress. Although the CFTC may appeal, Kalshi can now participate in the election betting market two months before the election.
The ruling is a win for supporters of prediction markets, which are popular in crypto circles. Although Kalshi does not use cryptocurrency, the crypto industry has been closely following the case. Last year, the CFTC banned Kalshi from listing congressional control contracts, calling them illegal gambling and "contrary to the public interest." Kalshi subsequently sued, calling the decision "arbitrary and capricious."
Judge Jia M. Cobb of the U.S. District Court for the District of Columbia ruled in favor of Kalshi and vacated the CFTC’s injunction. Prediction markets are considered to be better at predicting events than polls and experts because participants have financial incentives to conduct in-depth research and express real opinions.
This year’s prediction market success story, Polymarket, runs on a crypto platform with over $450 million in trading volume in August. Despite being banned from trading with US residents, Polymarket settles via blockchain smart contracts and USDC. In contrast, Kalshi operates only in the US and uses USD settlement, but each contract requires CFTC approval.
The CFTC is considering a new rule that could ban entities it regulates from offering contracts for political contests, in part out of concern that it could undermine the integrity of elections.
