In a recent filing with an appellate court, lawyers for the US Commodity Futures Trading Commission (CFTC) argued that a federal judge made an error in permitting Kalshi, a prediction market operator, to list and trade contracts related to election outcomes. The CFTC contends that the lower court misinterpreted key terms under the Commodity Exchange Act and unjustifiably blocked the agency from scrutinizing transactions that involve gambling. The regulator had previously sought to prevent Kalshi from launching election contracts, but the court ruled in favor of the company. Consequently, Kalshi has introduced several event contracts tied to the 2024 election, including the presidential contest and state-level elections.
The CFTC's latest filing delves into the definitions of relevant terms, asserting that the agency did not employ an overly broad definition of gaming in its initial rejection of Kalshi's application. The regulator also pointed out that Kalshi has listed numerous election betting contracts, encompassing the outcome of the presidential election, the winner of the popular vote, and other state and federal elections. Furthermore, Kalshi's website indicates that additional contracts, including 'parlays' on various election outcomes, are forthcoming.
Having been forced to sit out the majority of the 2024 election betting surge due to its pending case, Kalshi is now one of two US-regulated prediction markets, with the other being Interactive Brokers' ForecastEx, while crypto-based offshore platform Polymarket dominates the field.