Political betting moved one step closer in the United States last week as a federal judge in Washington DC issued a stay on election contracts. The major development effectively sided with Kalshi, the popular regulated exchange and prediction market platform offering trading on the outcome of real-world events, in its legal battle with the Commodity Futures Trading Commission (CFTC).
Two Steps Forward, One Step Back
Despite the ruling of Judge Jia Cobb, Kalshi’s win was short-lived. Hours after it was cleared to start and went live with offering “contracts” on political events such as the upcoming Presidential Election that would see Donald Trump and Kamala Harris clash, the company faced another hurdle.
As announced by the Associated Press, on Thursday, the Court of Appeals for the District of Columbia Circuit issued a temporary freeze order against Kalshi. This order effectively once again halted the operator’s offering of betting contracts on the upcoming US elections. The temporary halt imposed by the Court of Appeals follows a move by the CFTC. The Commission moved to file an appeal against Cobb’s ruling.
In its decision, the CFTC claimed that betting on the outcome of political events may result in significant implications and harm in light of the upcoming elections. Moreover, the Commission argued that betting on the elections may be used by dishonest individuals who may attempt to disrupt the elections by manipulating public opinion.
The Future of Political Betting Is Uncertain, Again
In light of the Court of Appeal’s decision, the future of betting on political events in the US is once again unclear. The Court confirmed that it would review the CFTC’s appeal which caused the need to temporarily halt Kalshi’s offering on political contracts. It’s important to note that no specific timeline was confirmed.
Kalshi operates as a platform that offers a prediction market and political betting is part of its offering. The offering of “future contracts” as described by the platform enables it to operate in the US within a legal grey area as there are insufficient regulations.
Still, this offering has drawn criticism and scrutiny from the CFTC on more than one occasion. In light of the latest court decision, the future of event contracts or betting on US elections once again hangs in the balance.