CFTC Warns of Election Gambling Surge as Kalshi's Legal Battle Continues
TL;DR
- The CFTC is seeking to extend a pause on Kalshi's political prediction markets amid concerns over increased election gambling and market manipulation.
- A recent court ruling favored Kalshi, allowing them to offer political contracts, prompting fears of a surge in election gambling activities.
The U.S. Commodity Futures Trading Commission (CFTC) is raising alarms about a potential rise in election gambling following a recent court ruling that favored Kalshi. The CFTC has requested an appeals court to maintain a pause on Kalshi's political prediction markets while its appeal is underway, citing concerns that this ruling could lead to widespread market manipulation and threaten electoral integrity.
Kalshi's legal struggle with the CFTC has been protracted, dating back to their initial attempt to list election markets last year, which was blocked by the agency. After winning a recent ruling that allows them to offer contracts related to political party control in Congress, Kalshi's contracts went live but were soon suspended by the D.C. Appeals Court. The CFTC warns that if the pause is not extended, other exchanges might follow Kalshi's lead, significantly increasing election gambling activities.
The implications of the district court's ruling may also extend to the cryptocurrency sector, as it draws on the Supreme Court's Loper Bright decision that limits regulatory authority. Analysts suggest that without clearer legislation from Congress, federal agencies could face ongoing challenges to their authority. Kalshi's legal team maintains they are compliant with the law, but the CFTC has dismissed this claim, comparing it to a pharmacy dispensing illegal substances simply because they exist on the black market.
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