30s Summary

Prediction market firm Kalshi is disputing the U.S. Commodity Futures Trading Commission’s (CFTC) stance on election betting, arguing that only Congress has the power to close such markets. The CFTC had tried to block Kalshi from creating betting markets on political party control of the House or Senate. Kalshi sued the CFTC, claiming it had exceeded its power and violated the Administrative Procedure Act. The CFTC now wants to label all political contests as “gaming”, potentially banning election betting. Kalshi maintains the CFTC lacks jurisdiction to prohibit their betting contracts unless Congress intervenes. The CFTC must respond to Kalshi’s brief by 6 December.

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Kalshi, a company specializing in prediction markets, is currently contesting the U.S. Commodity Futures Trading Commission’s (CFTC) position on election betting. The CFTC is not a fan of these types of markets, but Kalshi is arguing that it’s Congress, not the regulator, that can put an end to them.

Things got complicated last September when the CFTC tried to stop Kalshi from setting up betting markets where people could place bets on which political party would control the House or Senate after the elections. The CFTC said these bets were more akin to “gaming,” were in violation of state law, and were therefore against the public interest.

Things escalated when Kalshi decided to sue the CFTC, claiming that the regulator had gone beyond its limits of power and had broken the Administrative Procedure Act (APA) in trying to put a stop to election prediction markets.

Now, the CFTC wants to stretch the definition of “gaming” to include all forms of “political contests”—a move that could lead to a ban on election betting. Meanwhile, Kalshi reasserted its initial arguments to the lower court in its latest court filing. It’s now requesting the appellate court to uphold the lower court’s ruling.

They are arguing that the CFTC does not have the jurisdiction to prohibit their betting contracts unless Congress says so. The CFTC is set to respond to Kalshi’s brief by Dec 6. So, stay tuned for the next round in this legal boxing match.