Election Betting Contracts Are Legal as Kalshi Wins CFTC Court Battle

Kalshi, a U.S. event prediction market, won a federal appeals court case allowing election betting contracts despite CFTC opposition.

What's the Scoop?  

• Court Decision: Judge Patricia Millett ruled that the CFTC did not prove that election betting contracts would be harmful to the public, denying the request to halt Kalshi's operations.
• Lawsuit Context: The lawsuit originated last year when the CFTC argued that the market's event contracts violated regulations. A lower court sided with Kalshi, and the CFTC has now denied the appeal.  
• Future of Kalshi Contracts: Kalshi has not said if election betting contracts have resumed, and it's unclear how the upcoming U.S. elections will affect the platform.
• CFTC Concerns: The CFTC has voiced concerns that allowing such contracts pushes its role beyond its congressional mandate, citing potential challenges in overseeing election-related markets.  

Bankless Take:  

Kalshi’s win is a notable development in the ongoing tension between prediction markets and regulators, especially as event contracts become increasingly popular as Polymarket climbs the ranks of the iOS App Store’s news category. With U.S. elections rapidly approaching, the focus will be on how Kalshi navigates this regulatory scrutiny while competing with Polymarket as it resumes its offerings. This ruling may encourage other event prediction platforms to take risks to get ahead as competition continues to grow. This could further test the limits of regulatory authority in the industry.