Predictions market Kalshi will again launch election bets on its platform after prevailing in its latest legal fight with the US derivatives regulator.
The US Court of Appeals for the DC Circuit was unmoved by the Commodity Futures Trading Commission’s (CFTC) argument that Kalshi’s offering of election bets would cause it or the public irreparable injury.
A three-judge panel ruled 3-0 that the CFTC’s requested emergency stay should be denied without prejudice.
The ruling means that within hours, US citizens will be permitted to legally place election bets on the platform with just over a month to go until the 2024 presidential election.
It comes after the District Court of Colombia ruled the CFTC exceeded its statutory authority in preventing Kalshi from taking election event contracts, as elections do not involve unlawful activity or gaming.
The court’s opinion said: “While the question on the merits is close and difficult, the Commission cannot obtain a stay at this time because it has not demonstrated that it or the public will be irreparably harmed while its appeal is heard.
“That failure is fatal to the Commission’s stay request because a showing of irreparable harm is a necessary prerequisite for a stay.”
According to Kalshi’s website, the platform’s presidential election market is due to go live just ahead of 17:00 ET today.
Largest legal election bets so far
While election event contracts have been traded on academic prediction markets in the past, Kalshi will be the first licensed commodities exchange to do so.
This means the offering has the potential to offer bets to far more users in much greater amounts than was previously legally possible.
Iowa Electronic Market and PredictIt historically limited contracts to several hundred dollars and to a small pool of users, but Kalshi could theoretically involve bets of up to $100m across the entire US.
The DC Circuit ruled the CFTC’s argument the election bets would threaten election integrity as speculative, dismissing this argument.
The court noted that existing markets have been permitting election contracts for years without any apparent integrity issues.
The CFTC is currently considering new rule-making that would classify election event contracts as gaming and therefore prohibited under its rules.