The Commodity Futures Trading Commission (CFTC) has asked the D.C. Circuit Court to withdraw its appeal against the legality of election markets. This paves the way for future election betting through prediction market sites such as Kalshi, Crypto.com, and Robinhood.
The move to dismiss the case also points to the CFTC validating the expansion of sports prediction markets, which have been the subject of much discussion among state regulators and sports bodies.
CFTC v Kalshi on election markets
After Kalshi opened a market on the US presidential election in 2023, the CFTC disapproved the event contract. In a press release in September 2023, they stated, “After reviewing the complete record, the CFTC determined the contracts involve gaming and activity that is unlawful under state law and are contrary to the public interest.”
Kalshi, however, challenged the CFTC ruling in court, and after a year-long battle, the US Court of Appeals for the District of Columbia ruled in Kalshi’s favor, allowing the market to be reactivated.
In the ruling, Judge Patricia Millett wrote that the CFTC had failed to show how the markets would damage the CFTC or the public. Kalshi reinstated the market, which saw over $500 million in trading volume.
Following the election, Donald Trump Jr. joined Kalshi as a strategic advisor, and his father nominated Kalshi board member Brian Quintenz to lead the CFTC. Quintenz has advocated for a continuation of both election and sports prediction markets.
Prediction markets here to stay?
Kalshi CEO Tarek Mansour celebrated the CFTC’s move to dismiss their appeal. Mansour posted on X that, “Election markets are here to stay. Prediction markets have been banned, censored, limited and pushed out for decades. This win solidifies their right to exist and thrive.”
Under the Trump administration, Kalshi has also expanded its markets on sports, creating event contracts for single-match winners in basketball, football, baseball, and ice hockey.
Six state regulators issued cease-and-desist letters following March Madness markets, which saw over $400 million in trading volume. Kalshi responded by filing counter-lawsuits and has won victories in courts in Nevada and New Jersey so far.
Kalshi has consistently argued that the CFTC holds exclusive jurisdiction over its activities, not state regulators. The latest action by the CFTC suggests the organization favors allowing Kalshi and other prediction market sites to continue their expansion.
The CFTC had planned to hold a meeting on the topic of sports markets last week, but cancelled. Since then, the NBA has followed the MLB in voicing concern about the lack of oversight on the markets, which it says amounts to sports betting.
Legal sports betting in all 50 states?
Kalshi has advertised its markets as offering legal sports betting in all 50 states. Courts have so far sided with the company and the CFTC move further validates its position. Federal betting laws in the US are a complex topic since PASPA reversed its ruling in 2018 to allow the legalization of sports betting by states.
The rise of alternative betting platforms such as prediction markets and sweepstakes has added further complications. If the appeals court accept the CFTC’s move to dismiss the case, bettors will essentially have legal election and sports betting in all states.
The move to dismiss the case may not be accepted by the court, however. The appeals court have the right to deny the move if they deem it in the public’s interest. Based on previous court rulings, that looks unlikely at this time.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
