Federal Appeals Court Rules on Election Betting

A federal appeals court ruled that the prediction market Kalshi can proceed with listing contracts for election betting.

In an opinion filed on Wednesday in the U.S. Court of Appeals for the District of Columbia Circuit, Judge Patricia Millett stated that the U.S. Commodity Futures Trading Commission (CFTC) failed to demonstrate that the “public will suffer irreparable injury absent a stay pending appeal.”

“The administrative stay is hereby dissolved,” Millet wrote.

Judge Millett also mentioned that the agency’s motion for a stay is “denied without prejudice,” allowing the plaintiff to refile in the future. With the U.S. elections about a month away, it remains unclear if contracts have resumed on Kalshi’s platform. Kalshi did not respond immediately to a request for comment.

Prediction markets like Kalshi allow users to bet on the outcomes of future events, including U.S. elections and even potential Taylor Swift album releases. CFTC Chair Rostin Behnam highlighted a “significant uptick” in event contracts listed on exchanges registered with the CFTC since 2021.

The CFTC and Kalshi have been in litigation since late last year after the agency asserted that Kalshi could not offer contracts pertaining to “congressional control contracts.” Last month, Judge Jia M. Cobb ruled that the CFTC overstepped its authority against Kalshi’s attempt to list contracts tied to U.S. elections, prompting the agency’s appeal of the ruling.

Judge Millett also addressed CFTC concerns regarding the regulation of congressional contracts. Behnam had previously cautioned that permitting these contracts would extend the CFTC’s jurisdiction beyond its Congressional mandate.

“Though the Commission would be authorized to investigate suspected manipulation, it could also draw on the expertise of other federal agencies or refer suspicious violations to those agencies,” Millett noted.

The CFTC declined to comment on the ruling.

The agency is currently working on rulemaking and voted in May to propose rules banning bets on political events.