Kalshi received a favorable court ruling regarding its contracts on political events.
The U.S. Court of Appeals for the D.C. Circuit upheld a district court ruling that allowed exchange firm Kalshi to offer contracts on political events, including November’s election.
The federal appeals court upheld Judge Jia Cobb’s ruling after the Commodity Futures Trading Commission (CFTC) filed an appeal in the D.C. Circuit after submitting an emergency motion for a two-week stay on Cobb’s decision to allow political contracts.
The CFTC argued that Kalshi’s contracts were tied to gambling harm allowing for a ban. It also argued that the firm’s contracts can lead to market manipulation by exchange traders.
“The problem is that the CFTC has given this court no concrete basis to conclude that event contracts would likely be a vehicle for such harms,” said the appeals court in its ruling.
Cobb allowed Kalshi to momentarily offer its contracts earlier this year after the CFTC blocked the firm from providing its markets. As a result of the blockage, Kalshi sued the CFTC arguing that the regulator didn’t have the proper authority to issue a ban.
Cobb ruled in favor of Kalshi after determining the CFTC exceeded its authority.
Despite the ruling, there has been pushback from organizations and government leaders against the availability of election contracts due to voting integrity and morality concerns.
“There is no way to undo the potential damage to the public interest of allowing bets in the final weeks of an election year,” said Better Markets Legal Director Stephen Hall.
