U.S. Election Betting: Federal Court ‘Erred’ in Letting Kalshi Launch Prediction Markets, CFTC Says

A federal judge “erred” in letting prediction market purveyor Kalshi list and trade election contracts, attorneys for the U.S. Commodity Futures Trading Commission argued in a brief to an appellate court Wednesday, reiterating many of the arguments it made before the lower court.

The district court judge overseeing Kalshi’s suit against the CFTC ignored the definitions of terms under the Commodity Exchange Act and “without basis” barred the agency from examining “‘transactions’ that involve gaming,” the filing said.

The judge ruled last month that the CFTC couldn’t bar Kalshi from listing election contracts. The regulator filed with the appeals court for a stay that would have prevented the company from launching the product pending the outcome of the appeal. But that court’s judges ruled the CFTC had not demonstrated there would be irrevocable harm.

As a result, Kalshi has listed a number of events contracts tied to the 2024 election, ranging from the winner of the presidential contest to who will win various states.

Wednesday’s filing went deep into definitions, arguing that the CFTC did not use an “expansive definition of gaming” in its rejection of Kalshi’s application to launch election markets.

The CFTC pointed to the new contracts in its filing, making a similar argument to its filing when it sought an emergency stay of the district court’s order to let Kalshi list these contracts.

“Kalshi has taken the decision as carte blanche to list dozens of election betting contracts, including bets on the outcome of the presidential election, the winner of the popular vote, margins of victory, which state will have the narrowest margin of victory, and bets on numerous other state and federal elections,” the filing said. “Kalshi’s website previews other contracts, including what it refers to as ‘parlays’ (a term used in sports betting) on various election outcomes, as ‘coming soon.'”

Kalshi, which is one of two U.S.-regulated prediction markets and settles trade in dollars (the other is Interactive Brokers’ ForecastEx), had to sit out most of the 2024 election betting boom while its case was pending. Crypto-based, offshore platform Polymarket dominates the field.