US Appeals Court Greenlights Kalshi to Relaunch Election Betting

About a year has passed since the legal battle between Kalshi, the New York-headquartered regulated exchange and prediction market, and the Commodity Futures Trading Commission (CFTC). In a surprise turn of events, an appeal filed by the latter with the Court of Appeals for the District of Columbia Circuit sided with the former on Wednesday this week.

The Integrity of the Elections Is Paramount

The landmark decision effectively enabled Kalshi to offer the so-called “event trading contracts” for the upcoming Presidential Elections in the country. This otherwise means that the company was cleared to offer Americans the option to wager on the outcome of the elections. The Presidential Elections are taking place in about a month, on November 5, 2024.

The key factor that tipped the scales was the CFTC’s inability to demonstrate how event contracts on the upcoming election may harm public opinion, something it had argued throughout the legal battle. The Commission also claimed it would be impacted if Kalshi started offering event contracts. But according to the Court of Appeals, the CFTC did not present sufficient facts to back its claims.

The Court’s ruling pointed to the importance of ensuring the integrity of the upcoming elections, as well as combatting attempts for misinformation, as announced by Reuters. The ruling also acknowledged that such risks may threaten the election process and result in significant harm.

“Ensuring the integrity of elections and avoiding improper interference and misinformation are undoubtedly paramount public interests, and a substantiated risk of distorting the electoral process would amount to irreparable harm. The problem is that the CFTC has given this court no concrete basis to conclude that event contracts would likely be a vehicle for such harms,“

reads the Court of Appeals’ recent ruling

Kalshi Enjoys a Major Win

The decision effectively clears Kalshi to offer political event contracts ahead of the Presidential Elections. The latest ruling comes after the CFTC filed an appeal against a lower court’s ruling that sided with Kalshi.

Between the lower court’s decision and the appeal, the company was only permitted to offer election betting for several hours. However, once the appeal was filed, a freeze order was enforced.

Still, the latest decision undoubtedly marks a major win for Kalshi. What’s more, the ruling may be used by other companies that seek to offer similar event contracts, paving the way for the expansion of the activity in the future.