CFTC Drops Appeal Against Kalshi, Allows Political Event Contracts
1min read The US Commodity Futures Trading Commission (CFTC) has filed a motion to dismiss its appeal against Kalshi, a prediction market platform. This move, if approved by the court, would allow Kalshi to continue offering political event contracts to users without further legal contest. The CFTC's decision comes after a federal court ruling in favor of Kalshi, which stated that the regulator could not bar the platform from listing political event contracts.
In a filing on May 5, lawyers for the CFTC submitted an unopposed motion for voluntary dismissal in the US Court of Appeals for the District of Columbia Circuit. This motion suggests an agreement between the CFTC and Kalshi, potentially ending the regulatory dispute. Kalshi, in a joint filing, agreed to bear its own costs, court fees, and attorney fees if the court grants the CFTC's motion to dismiss. Following the filing, Kalshi expressed optimism, stating that "election markets are here to stay."
The legal battle between Kalshi and the CFTC began in 2023 when the regulator ordered Kalshi to stop offering political event contracts. Kalshi filed a lawsuit in response, winning in the lower court and prompting the CFTC's appeal in September 2024. The case was primarily handled before the US election and the appointment of acting CFTC chair Caroline Pham under President Donald Trump. Commissioner Summer Mersinger, nominated by Joe Biden, had previously echoed Kalshi’s sentiment, claiming that election prediction markets were “here to stay.”
Launched in 2021, Kalshi gained popularity among many crypto users, particularly due to bets related to the 2024 US election. The CFTC had argued in its appeal that betting on elections could result in market manipulation and harm to the public interest. However, the regulator under Pham and Trump appeared to have reversed its position with the motion to dismiss, indicating a shift in regulatory stance towards prediction markets.
This development marks a significant turn in the regulatory landscape for prediction markets. The CFTC's decision to drop the appeal suggests a potential change in approach, allowing platforms like Kalshi to operate more freely. However, it remains to be seen how this decision will impact future regulatory actions and the broader debate surrounding the legality and ethics of prediction markets, especially those involving political events.
Ask Aime: How will Kalshi's regulatory victory affect the future of prediction markets in the US?
