TLDR:
- Kalshi launched U.S. election prediction markets after court win against CFTC
- CFTC appealed the decision, seeking to block election gambling
- Judge ruled CFTC overextended its authority in trying to prevent the markets
- Kalshi’s first pools are on control of Senate and House in 2024 election
- Legal battle ongoing as CFTC cites concerns about election integrity
On September 12, 2024, Kalshi, a legal and regulated prediction markets platform, launched its first U.S. election betting pools following a federal court victory against the Commodity Futures Trading Commission (CFTC).
This move marks the first time in nearly a century that regulated election markets have been available in the United States.
The launch comes after U.S. District Judge Jia Cobb ruled in favor of Kalshi, criticizing the CFTC’s efforts to conduct a public interest review of the company’s election-based prediction markets plans.
Judge Cobb argued that the CFTC was overextending its authority, stating, “Kalshi’s contracts do not involve unlawful activity or gaming. They involve elections, which are neither.”
Following the court decision, Kalshi introduced two betting pools: one tied to which party will control the Senate after the 2024 election, and another for control of the House of Representatives. Tarek Mansour, Kalshi’s founder, celebrated the launch on social media, dedicating it to the prediction markets community.
The first election market is live on @Kalshi.
Today marks the first trade on regulated election markets in nearly a century.
This one is for you, the prediction markets community. pic.twitter.com/USzzVMffQn
— Tarek Mansour (@mansourtarek_) September 12, 2024
However, the CFTC quickly responded by filing an appeal in the U.S. District Court for the District of Columbia. The regulator is seeking to block Kalshi from operating political betting pools linked to the 2024 U.S. general election outcomes.
CFTC lawyers expressed concerns about the potential impact on election integrity, stating, “This is a very serious public interest threat. We can easily imagine this playing out in the form of misinformation.”
The legal battle between Kalshi and the CFTC has been ongoing since November 2023, when Kalshi first sued the regulator after being told it could not offer contracts settled based on which political party would control each chamber of Congress.
Judge Cobb’s ruling represents a significant setback for federal regulators’ efforts to prevent betting on U.S. elections, especially with less than two months remaining before Americans go to the polls.
The CFTC has consistently opposed Kalshi’s plans to offer election-based prediction markets, citing concerns about undermining the integrity or perception of integrity of upcoming U.S. elections.
Kalshi, founded in 2018, has been working towards offering U.S. election-based betting since at least 2022. The company’s efforts were previously blocked by the CFTC during the U.S. midterm elections that year.
As of September 13, 2024, a federal appeals court has temporarily halted Kalshi’s newly launched political prediction markets.
The court ordered Kalshi to pause its contracts while it considers the CFTC’s emergency motion for a stay. Trading on Kalshi’s two new contracts was paused at 11:30 p.m. ET on September 12, with a notice on the company’s website citing a “pending court process.”
The CFTC argued in its filing that Kalshi wouldn’t be significantly harmed by a temporary halt to its contracts, while the public interest could be harmed more if the contracts continued.
Kalshi’s attorneys have pushed back, stating that no administrative stay is necessary or appropriate.
The appeals court has ordered Kalshi to file a response by Friday evening, with the CFTC allowed to reply by Saturday evening.
