The CFTC is not happy with Kalshi being permitted to put up election contracts on its platform.
The Commodities Futures Trading Commission (CFTC) called the district court out for erring “at every turn” in the Kalshi case. This court allowed the prediction markets platform to list contracts associated with the upcoming US elections, siding against the CFTC.
Kalshi receiving the approval to list its contracts until further ruling has rubbed the regulator the wrong way, as it feels its actions to block these contracts were well within its authority. An October 16 court filing revealed all, as the CFTC mentioned, “. The Commission exercised its authority under the Commodity Exchange Act (‘CEA’) to prohibit, if against the public interest, certain contracts that ‘involve’ one of five enumerated activities.” It also mentioned how Kalshi has never denied its contracts fall under “gambling or betting on elections.”
“Nonetheless, the district court erroneously held that the CEA did not authorize the Commission to prohibit a futures exchange from offering bets on the outcomes of elections,” the filing continued to read, adding, “The district court erred at every turn, rejecting the plain meaning of, or simply confusing, four separate terms or phrases in the statute.”
How Did Both the Parties Get Here?
The whole saga kicked off last year when the CFTC ordered Kalshi to stop listing event contracts related to US politics. Kalshi, then, filed suit to have this order removed, which extended well into this year until September when the platform won the case. A Washington DC judge ruled that the regulator does not hold the authority to stop Kalshi from putting up these contracts. The platform listed multiple election contracts only to take them down shortly due to the CFTC appealing the court’s decision.
That appeal, made on September 6, evoked an “emergency stay,” which forced Kalshi not to list the contracts until the stay was resolved. The ruling came on October 2, as the US Court of Appeals for the District of Columbia Circuit sided against the CFTC, with Kalshi being permitted to list the contracts again. It has done so, and users have poured millions into these contracts ranging from the winner of the presidential elections to which state will have the narrowest margins.
However, the final ruling surrounding the CFTC’s appeal is still pending, which, according to an October 11 filing, would be sped up by the judge presiding over it. However, the final brief from the CFTC would be welcomed on December 6, well after the elections end.
