CFTC Backs Down on Appeal in Political Betting Case Against Kalshi

The Commodity Futures Trading Commission (CFTC) has decided to withdraw its appeal in federal court related to a case against Kalshi. The prediction market remains embroiled in proceedings and legal challenges as the future of such products has been somewhat hazy. However, the CFTC’s latest decision suggests that prediction markets might be here to stay.

CFTC Dropped Its Appeal

On Monday, the CFTC voluntarily dropped its appeal in a case against Kalshi. This followed a September ruling, which allowed Kalshi to offer event contracts on the latest US presidential election.

Political betting, for context, remains a point of contention in the US. While wagering on political outcomes is technically illegal, alternative products, such as prediction markets, have mostly avoided the usual regulatory scrutiny. In addition to that, election betting has proven vastly popular, generating high engagement.

While Kalshi’s products do not technically constitute betting, the CFTC challenged the market because of its political offerings. This ended with the US District Court for the District of Columbia ruling in Kalshi’s favor.

As mentioned, the CFTC, which was preparing to appeal this ruling, has now backed down and dropped the appeal. The body did not provide a clear reason for seeking a voluntary dismissal of its challenge.

This followed an earlier decision in which the CFTC also canceled a meeting on which stakeholders would have been able to voice their thoughts on the future of prediction markets and their co-existence with traditional betting.

Prediction Markets Are Here to Stay, Kalshi’s CEO Says

Shortly after the CFTC decided to drop its appeal, Tarek Mansour, Kalshi’s co-founder and CEO, posted a triumphant statement on X, saying that prediction markets are here to stay. He thanked everyone who has supported prediction markets’ right to exist.

Thank you to everyone who was part of this, who stuck with us through the hard times, who traded our markets since early days, who sent countless comment letters, and who fought relentlessly on the frontline alongside Kalshi.

Tarek Mansour, co-founder & CEO, Kalshi

Mansour concluded that this represents a win for both Kalshi and all Americans.

Kalshi Still Faces Regulatory Challenges

The latest win, however, isn’t to say that the prediction markets sector remains challenge-free. Kalshi, in particular, continues to face regulatory scrutiny in multiple states. The company has adamantly refused to back down and has vowed to strike back in states where it faces pushback.

Gambling regulators and other industry stakeholders have remained opposed to prediction markets because of their similarity to betting and laxer regulations. Whereas most US markets sport strict betting frameworks, which are overseen by state regulators, prediction markets are regulated by the CFTC and therefore able to operate on a national level.

The NBA has likewise expressed certain concerns about the growth of prediction markets.