Federal judge clears way for betting on U.S. elections in predictions market case
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There are now two election-related betting contests legally trading on events-based marketplace Kalshi, following an opinion by a federal judge in favor of the company.
Why it matters: Hundreds of millions of dollars have already been wagered on this year's U.S. election, but all of those bets were made in a legal grey area, one that seems to have just become a lot more clear.
Catch up quick: Kalshi, a startup predictions market where people can place wagers on real-world events, had sued the Commodities Futures Trading Commission (CFTC) for seeking to block it from offering a market for election outcomes.
- The regulator had argued that election-linked contracts "fail to serve the economic purpose of the futures markets" it regulates, while critics warned they would harm the integrity of elections.
Driving the news: The company prevailed over the agency in court Thursday, when a federal judge lifted a temporary stay of her ruling last week.
- "The CFTC's order exceeded its statutory authority," District Court Judge Jia Cobb wrote in an opinion released today. "Kalshi's contracts do not involve unlawful activity or gaming. They involve elections, which are neither."
- "Congress did not authorize the CFTC to conduct the public interest review it conducted here."
What they're saying: "Election markets are now legal in the United States," Kalshi cofounder Luana Lopes Lara said in a statement on social media. "It feels like a dream for us to say it. Infinitely honored and humbled to bring these markets back to the US after 100 years."
- "It is a win for Kalshi and for all CFTC-regulated derivatives markets that want to pursue responsible innovation under the rule of law," Joshua Sterling, partner at the law firm Milbank which represented Kalshi in the case, said in a statement.
The latest: Kalshi has only posted markets for control of the two chambers of Congress so far, but tabs on its elections page suggest other markets are coming.
What's next: The CFTC has already filed that it intends to appeal.
