Federal Appeals Court Ruling on Election Betting

A federal appeals court ruled that predictions markets Kalshi can proceed to list 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) did not demonstrate that "the public will suffer irreparable injury absent a stay pending appeal."

"The administrative stay is hereby dissolved," Millett wrote.

Millett also denied the agency's motion for a stay "without prejudice," which allows the CFTC to refile in the future. With U.S. elections approaching, it remains unclear if contracts have resumed on Kalshi's platform. Kalshi did not immediately respond to requests for comments.

Event markets like Kalshi enable users to bet on the outcomes of future events, including upcoming U.S. elections or even the release dates of Taylor Swift albums. CFTC Chair Rostin Behnam previously warned about a “significant uptick” in event contracts available for trading on exchanges registered with the CFTC since 2021.

The CFTC and Kalshi have been engaged in a lawsuit since late last year after the agency claimed Kalshi could not offer contracts related to "congressional control contracts." Last month, Judge Jia M. Cobb of the U.S. District Court for the District of Columbia ruled that the CFTC exceeded its authority in opposing Kalshi's listing of election-related contracts. Subsequently, the CFTC appealed this ruling.

Judge Millett also addressed the CFTC's concerns about regulating congressional contracts. Behnam had previously cautioned that permitting these contracts would overextend the CFTC’s congressional mandate and expertise.

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

The CFTC has 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.