Kalshi, the first regulated market for predicting election outcomes, has reached an important milestone in its short history. Today, the CFTC took a new, historic step. In return, it will withdraw its own appeal of that ruling, allowing Kalshi to proceed with providing contracts on election results. This decision comes after a wild and unpredictable legal fight. It’s a great success for prediction markets in the United States.
Kalshi, headed by former CFTC Chief Economist Tarek Mansour, sells contracts that let anyone bet on the outcome of specific political events. You’ll make predictions as to who will be the Republican and Democratic presidential nominees for the 2028 general election. You’ll predict the outcome of the Georgia Senate race and who will win the Republican nomination for governor of Ohio. The platform has garnered widespread national interest for its novel, data-driven approach to forecasting elections. For the users, it provides a truly refreshing arena to participate in predictive wagering.
In January, Kalshi hired Donald Trump Jr. to act as a strategic advisor. This decision is designed to increase the company’s clout and reach in the political space. The company ran into deep troubles when the CFTC prohibited it from offering contracts on elections. Things really flared when the court sided with Kalshi. The court clarified that Congress did not authorize the CFTC to engage in a public interest review that led to the banning of the products. Days after the ruling, a federal appeals court lifted the stay on Kalshi’s operations. The court’s decision clears the way for the company to begin accepting bets on election outcomes.
Not surprisingly, despite this initial win, the CFTC did not relent in its battle to reverse the positive ruling. Its recent decision to withdraw the appeal has surprised—and disappointed—many in the financial reform community. Better Markets, a financial reform advocacy group, criticized the CFTC’s move as “a stark betrayal of the public interest.” Our legal director, Stephen Hall, expressed grave concerns about what this decision could mean. He warns that it endangers the security of federal elections and might allow manipulation of federal markets.
“That decision was bad law and even worse policy, as it threatens the integrity of our federal elections, promises a new wave of market manipulation and investor losses, and casts the CFTC in the role of election supervisor, something the small agency lacks the resources or expertise to do.” – Stephen Hall, Better Markets’ legal director.
Tarek Mansour couldn’t hide his enthusiasm at the result. He called it a historic day for Kalshi and for prediction markets in America. He insisted that the firm has really never thought about doing it any other way, despite the challenges.
“Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off.” – Kalshi CEO Tarek Mansour.
Unfortunately, the implications of this ruling reach far beyond Kalshi. Prediction markets have recently taken root in American politics. If successful, this increase would set the stage for additional platforms to take those same services and deliver them. Critics remain wary of potential consequences.
CNBC’s Jesse Pound weighed in on the topic, highlighting the broader ramifications of the CFTC’s decision to drop its appeal. He expressed an outcome as simple as this dismissal leaves the lower court’s ruling in place, potentially creating bad legal precedent.
“Moreover, with this dismissal, the lower court decision will remain intact, setting a terrible and enduring legal precedent. This about-face, without any hint of a justification and after the case was fully briefed and argued by both sides, is an ominous setback for all Americans.” – Jesse Pound, CNBC.
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