A CFTC commissioner has dissented against the US derivatives regulator’s decision to appeal its court loss against Kalshi for election bets.
The Commodity Futures Trading Commission (CFTC) on Monday (9 September) voted to authorise it to appeal its loss against the prediction market and trading platform.
It follows the DC District Court siding with Kalshi in a summary judgment last Friday, authorising the platform to allow election bets just two months ahead of the presidential election.
Commissioner Caroline D. Pham (pictured) said: “From a procedural standpoint, the Commission has once again taken a ‘ready, shoot, aim’ approach to the Commission’s deliberations.
“I respectfully dissent because the Commission has been asked to grant a blank-check authorisation to appeal from the US District Court’s order without sufficient information.”
The CFTC had argued in court filings that Judge Jia M. Cobb should stay the decision until she issues a full opinion explaining her reasoning.
Pham, appointed by president Biden in 2022, took aim at the apparent hypocrisy of making this argument while also voting to appeal, arguing that the Commission’s actions did not match its words.
She added: “To be clear, I do not have an issue with the CFTC potentially exercising our right to appeal.
“Rather, I continue to be concerned that the Commission is constantly rushed to vote before thinking it through. As I’ve said before, bad process begets bad outcomes.”
The court ultimately agreed a temporary three-day administrative stay ahead of a Thursday hearing, after which it would decide whether to grant or deny the CFTC’s request.
Pham said: “The Commission should see what happens first and respect the legal process before it takes a knee-jerk reaction to delegate its authority without all the facts.”
CFTC attempts to ban election bets
The news is the latest chapter in the CFTC’s ongoing attempts to clamp down on election betting offered by prediction markets.
These markets often do so by offering event derivative contracts on the outcome of elections, which they argue should be classified as derivatives.
The regulator drew up new rules in May, which it has yet to finalise and which would ban this activity by ruling these contracts as “gaming”.
A group of eight House and Senate democrats, including former presidential candidate Elizabeth Warren, issued an open letter last month urging the CFTC to progress its tabled ban.
The letter read: “Election gambling fundamentally cheapens the sanctity of our democratic process. Political bets change the motivations behind each vote, replacing political convictions with financial calculations.
“Allowing billionaires to wager extraordinary bets while simultaneously contributing to a specific candidate or party, and political insiders to bet on elections using non-public information, will further degrade public trust in the electoral process.”
New Zealand-based prediction market PredictIt is also pursuing separate litigation against the CFTC.