CFTC Rejects Kalshi’s Congressional Betting Proposal

In addition to sports betting, placing wagers on different events has been gaining popularity over the last few years. Along with that, came attempts to place wagers on political outcomes, an activity that is criticized rightfully given its nature. Back in 2020, KalshiEX LLC became the first regulated financial exchange dedicated to trading event contracts.

That was possible after the company secured approval from the Commodity Futures Trading Commission (CFTC). As a result, the company secured approval to enable investors to trade on expected outcomes for future events. Recently, the company sought to receive approval from the CFTC to offer congressional election contracts on its platform. However, the regulator rejected the proposal from Kalshi to offer markets for which party would control the Congress in the US.

In a recent statement, the CFTC confirmed the rejection of the proposal. It explained that after a review, it determined that such “contracts involve gaming and activity that is unlawful under state law and are contrary to the public interest.” Citing CFTC Regulation 40.11, along with section 5c(c)(5)(C) of the Commodity Exchange Act (CEA), the CFTC said that the contracts “are prohibited and cannot be listed or made available for clearing or trading on or through Kalshi.”

The decision of the CFTC has put a temporary halt on Kalshi’s efforts for its congressional contract. Another company that offers markets for political events is PredictIt. Currently, the company offers a wide range of such markets but doesn’t have congressional contracts, which was the purpose of Kalshi’s inquiry.

Not the First Rejection for Kalshi

Tarek Mansour, Kalshi’s CEO, commented on the recent rejection the company received from the CFTC. In multiple posts on X, formerly Twitter, the company’s boss confirmed that it disagreed with the decision of the regulator, deeming it “arbitrary and capricious.” Moreover, Mansour explained that Kalshi has taken a bold move with the intent to offer such contracts.

“Our mission is bold. Bold missions are hard. This is not the first time the Kashi team gets a “NO” and it’s probably not the last time. We have pushed through the previous NOs and we will push through this one,“

wrote Tarek Mansour, Kalshi’s CEO

Speaking about the past, Kalshi’s boss said that this is not the first rejection the company has faced and certainly not the last one. Finally, Mansour said that the company will continue its efforts and determine what would be the best course of action.