Federal court clears Kalshi to list election betting contracts, denies CFTC's motion

A federal appeals court ruled that predictions markets Kalshi can go ahead and list contracts to allow election betting. 

In an opinion filed on Wednesday in the U.S. Court of Appeals for the District of Columbia Circuit, Judge Patricia Millett ruled that the U.S. Commodity Futures Trading Commission failed to show that the "public will suffer irreparable injury absent a stay pending appeal." 

"The administrative stay is hereby dissolved," Millett wrote. 

Millett also said the agency's motion for a stay is "denied without prejudice," meaning the case is dismissed, but it allows the plaintiff to refile in the future. With U.S. elections about a month out, it's unclear whether contracts have resumed on Kalshi's site. Kalshi did not immediately respond to a request for comment. 

Event markets, such as Kalshi, allow users to bet on the outcome of future events, including on the upcoming U.S. elections or even when certain Taylor Swift albums may be released. CFTC Chair Rostin Behnam has warned about a "significant uptick" in event contracts listed for trading on exchanges registered with the CFTC since 2021.

The CFTC and Kalshi have been in a lawsuit since late last year after the agency said that Kalshi could not offer contracts related to "congressional control contracts." Then, last month, Judge Jia M. Cobb for the U.S. District Court for the District of Columbia ruled that the CFTC exceeded its authority when it pushed back against prediction market Kalshi's move to list contracts tied to U.S. elections. The agency then quickly appealed the ruling. 

Judge Millett also addressed concerns from the CFTC on Wednesday about how the agency would regulate congressional contracts. Behnam previously said that allowing the contracts would "push the CFTC, a financial market regulator, into a position far beyond its Congressional mandate and expertise."

"Though the Commission would be authorized to investigate suspected manipulation, it could also draw on the expertise of other federal agencies or refer suspected violations to those agencies," Millet wrote.

The CFTC declined to comment.

The agency is working on a rulemaking and   voted in May to propose rules banning bets on political events.