U.S. Election Betting Delay Would Be ‘Disastrous’ to Kalshi, Firm Warns
Kalshi, the U.S. prediction market platform that recently emerged victorious in a legal battle against its regulator, has stated that its future hinges on being able to offer election betting contracts before Americans head to the polls on November 5th. In response to an emergency motion filed by the Commodity Futures Trading Commission (CFTC) seeking to prevent the listing of such contracts for another 14 days, Kalshi emphasized that the motion holds no merit and warned that granting it would cause irreparable damage to the company. Kalshi further asserted that any delay would be devastating, as the firm has invested heavily in the litigation and the associated markets.
The CFTC had previously prohibited Kalshi from listing contracts predicting which party would control each house of Congress after the election, claiming that such contracts constituted unlawful gaming and were contrary to the public interest. Kalshi responded to this decision by suing the regulator, criticizing the ruling as arbitrary and capricious. Last week, in a favorable ruling for Kalshi, Judge Jia M. Cobb sided with the company; however, the reasoning behind her decision is yet to be disclosed.
Kalshi eagerly announced its triumph on its website, stating, “We did it! U.S. election markets are coming to Kalshi.” However, shortly thereafter, the CFTC filed an emergency motion requesting a 14-day stay on Cobb’s order until her rationale is published. The agency argued that it could not determine whether to appeal the decision without understanding the judge’s reasoning. If the stay is granted, Kalshi would be prohibited from listing election markets until at least late September. This delay has prevented the company from taking part in the current boom in election betting.
In response, Kalshi filed a document on Sunday arguing that the Commission was defeated on the law and should not be allowed to impede their victory with procedural tactics to buy more time. Kalshi is the only CFTC-regulated prediction market in the U.S., offering contracts on a wide range of events, from predicting U.S. students’ test scores to forecasting the rise of Bitcoin. Both PredictIt, an established U.S. platform settling bets in fiat currency, and Polymarket, a breakout success in prediction markets and cryptocurrency, have managed to gain market share at the expense of law-abiding Kalshi. Kalshi warned that further delays may render it impossible for them to compete effectively in this space.
Supporters of election contracts, including academics, investors, and businesses, argue that these contracts provide a means to hedge risks and offer valuable information for forecasting. They emphasize that the public has been deprived of these benefits for over a year due to the CFTC’s previous unlawful order. With the election drawing closer, Kalshi stressed that it is crucial for these benefits to materialize. On the other hand, Better Markets, a lobbying group that opposed Kalshi’s plan, described the judge’s ruling as a “Dangerous Step Towards Allowing Gambling on U.S. Elections, Threatening Democracy and the Integrity of our Markets.”