CFTC says court ‘erred at every turn’ in allowing Kalshi’s election markets

The district court judge overseeing betting market Kalshi’s suit against the United States Commodities Futures Trading Commission “erred at every turn” when it allowed the platform to list and trade election odds, the regulator says.

In an Oct. 16 filing to a Washington, DC, appeals court, the CFTC said a federal court ignored the “plain meaning” of terms under the Commodity Exchange Act (CEA) and prevented the regulator “without basis” from properly examining certain kinds of transactions. 

The regulator argued the court “mistakenly erred” when considering important details on whether Kalshi should be allowed to list political event contracts. 

The CFTC said the court had “ignored or disregarded” simple definitions of what constitutes “gaming” or “event-focused” contracts or transactions when allowing Kalshi to list election odds on its platform. 

Kalshi sued the CFTC in November 2023, aimed at overturning an order prohibiting Kalshi from listing political event contracts. 

Kalshi prevailed in its lawsuit against the CFTC in September, with a Washington, DC federal court ruling that the commodities regulator would not be allowed to prevent Kalshi from listing political election contracts. 

However, the CFTC appealed the ruling on Sept. 6 and sought an “emergency stay” to stop Kalshi from listing political contracts until the outcome of the appeal had been decided. 

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On Oct. 2, the US Court of Appeals for the District of Columbia Circuit ruled against the CFTC’s appeal and on Oct. 7 Kalshi was legally permitted to list US election odds markets.

Following its victory over the CFTC, Kalshi listed dozens of election betting contracts including odds on the outcome of the presidential election, the winner of the popular vote, and which state will have the narrowest margin of victory. 

In its most recent filing, the CFTC said Kalshi’s election contracts are akin to gambling and should be barred from being listed in the US.

“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,’” said the CFTC. 

In an Oct. 11 filing, the judge overseeing the case agreed to expedite the final ruling on the CFTC’s appeal, however, the final brief from the CFTC is not required until Dec. 6, about one month after the election.

Due to the ongoing legal proceeds, Kalshi was forced to wait on the sidelines while other betting markets such as Polymarket raked in billions of dollars in betting volume. 

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