A federal appeals court made a major judicial ruling that lets Kalshi, a derivatives exchange, set up election prediction markets in the United States. This decision is especially noteworthy because it comes after officials had previously been against it.
The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Kalshi on October 2 against the Commodity Futures Trading Commission (CFTC). The CFTC wanted to stop the exchange from listing contracts that were tied to political outcomes, especially since the election was coming up. In addition, this decision makes it possible for other sites, like Polymarket, to do the same things.
Polymarket’s website said that more than $1 billion was at stake in the upcoming presidential race as of the date of the decision. The CFTC had earlier said that Kalshi’s political contracts were like gaming, which is against the law in California, and they were not in the public interest. Their main worry was with contracts that would bet on which political party would win the election and take control of Congress.
In September, Kalshi successfully fought the CFTC’s ban in court. This caused the commission to file an appeal and ask that no new political contracts be made until they made a decision. The latest decision, on the other hand, said that the CFTC had not shown that letting Kalshi work would hurt the public or the commission itself in a way that could not be fixed during the appeal process.
The court made it clear that its decision was not an approval of Kalshi’s goods, but rather a formal ruling about the CFTC’s overreach in its regulatory powers. The courts came to the conclusion that the commission could not stop Kalshi’s business without clear proof of harm. This suggests that the ongoing legal fight is important for more than just Kalshi and for election betting in the US as a whole.
With this decision, Kalshi can now offer a controlled platform for people in the U.S. to bet on elections. This makes them more competitive with decentralized platforms like Polymarket, which is not regulated by the U.S. The CFTC is still trying to get these kinds of markets banned more broadly, but the result may be good for both Kalshi and Polymarket because it makes betting on elections legal in the US.
