- The CFTC has dropped its appeal, allowing Kalshi to legally offer political prediction markets.
- A federal judge ruled the CFTC overstepped in blocking Kalshi’s event contract offerings.
- Kalshi now plans market expansion after securing a legal win for prediction trading platforms.
The U.S. Commodity Futures Trading Commission has moved to dismiss its appeal against the prediction market Kalshi, ending a closely watched legal battle over whether Americans can bet on election outcomes using event contracts. In an X post, Kalshi confirmed the move, stating, “Election markets are here to stay.” The case has drawn national attention due to its potential impact on the future of political predictions in the U.S.
The controversy began in 2023 when Kalshi requested authorization from the CFTC to launch contracts, based on which a political party would control Congress. The agency blocked the request, declaring that the contracts matched unlawful gambling terms. In response, Kalshi initiated legal action against the CFTC, accusing it of exceeding its regulatory authority.
In September 2024, a federal judge favoured Kalshi, allowing the platform to move forward with its political event contracts. The CFTC immediately appealed and requested a stay on the judge’s order, but was denied by the D.C. Circuit Court. Although in January, the court heard oral arguments, it did not issue a final ruling. Now, the CFTC has voluntarily moved to dismiss its case.
According to the filing, each party would cover its own costs and legal fees. The vote to drop the appeal passed 3-0, with one commissioner abstaining. Calling the decision as a historic move, Kalshi CEO Tarek Mansour stated that he validated Kalshi’s long-standing approach to legal compliance.
Based in New York, Kalshi runs a platform where users trade contracts based on real-world events. Notably, its election markets have grown in popularity recently. Last year, the company partnered with Robinhood and expanded its services. It also filed lawsuits in Nevada and New Jersey over restrictions on sports contracts.
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Earlier this year, CFTC Commissioner Summer Mersinger stated that election contracts are likely to remain, noting that only Congress could force a major change. Meanwhile, critics argued that prediction markets introduce risk into financial systems while supporters stated taht they provide valuable insights, promoting civic engagement.
The CFTC’s retreat comes amid evolving regulatory debates around digital markets. The case highlights growing tensions between traditional oversight and emerging platforms. While the decision settles Kalshi’s legal fight, the broader debate over political betting and digital market oversight remains. With the latest development, Kalshi plans to expand its offerings, confident that the U.S. election markets have cleared a major legal hurdle.
