After a judge yesterday struck down an order from the U.S. Commodities and Futures Trading Commission (CFTC) forbidding U.S.-regulated prediction marketplace Kalshi from offering prediction contracts related to the 2024 election, the website celebrated with a triumphant message on its homepage: "We did it! U.S. election markets are coming to Kalshi. Stay tuned for more info, and God bless America!"
However, in an motion filed at nearly midnight last night, the CFTC is seeking an emergency stay of the judge's decision for at least two weeks while the agency works on an appeal. The filing comes even before the judge in the case, United States District Judge for the District of Columbia Jia Cobb, published her opinion explaining the original dismissal order, which was issued earlier on Friday.
"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 CFTC's emergency filing states. However, the agency argues "time is of the essence" when it comes to the matter as Kalshi could potentially list regulated elections contracts as soon as Tuesday morning, should the company self-certify the contracts on Monday and wait the required one business day before a public listing.
The unusual request comes as Kalshi attempts to capitalize on the rise in popularity of political prediction marketplaces, especially Polymarket, the decentralized prediction market popular among crypto traders but which legally bars those in the U.S. from participating. (U.S. traders are officially banned, anyway; many traders likely circumvent the restrictions by using VPN software to disguise their true country of origin.)
The CFTC, according to its filing, is worried that should the contacts begin trading, the agency won't be able to revoke approval later. "If Plaintiff lists its contracts for trading, the CFTC has very limited recourse to cease trading or otherwise unwind the contracts," the filing states, arguing that such a decision would cause the CFTC "irreparable injury."
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The CFTC also argues that postponing the approval is in the public interest. "The relevant contracts could potentially be used in ways that would have an adverse effect on election integrity, or the perception of election integrity, and could put the Commission in the position of investigating election-related activities," the filing states.
Crypto VC firm Paradigm had filed an amicus brief in favor of Kalshi's lawsuit, noting that offering such contracts has two main benefits. "First, they allow parties directly impacted by political outcomes to mitigate risk by hedging. Second, they provide information that the public can use to better predict—and thus plan for—a given outcome," Paradigm's amicus brief states.
Kalshi was unable to be immediately reached by The Block for comment.
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