The US court’s decision has let the citizens of the country bet on the upcoming election through derivatives. Kalshi has secured a victory in the year-long legal proceeding by defeating the Commodity Futures Trading Commission (CFTC) in the US courtroom on September 6. Late Friday, the agency submitted an emergency motion requesting a federal judge to issue a temporary stay on her ruling in favor of Kalshi.
Kalshi’s Victory
During 2023, the CFTC refrained the financial exchange and prediction market Kalshi from offering contracts that would allow betting on which party would control each chamber of Congress after the US elections scheduled on November 4. The agency argued that such contracts would constitute illegal gambling and be “against the public interest.” In response, Kalshi filed a lawsuit, criticizing the decision as “arbitrary and capricious.”
On Friday, Judge Jia Cobb of the US District Court ruled in favor of Kalshi, overturning CFTC’s decision. In response to the development, the Kalshi co-founder and CEO Tarek Mansour acknowledged that the election markets have become legal in the United States for “the first time in 100 years.”
Variant Fund chief legal officer Jake Chervinsky stated that it is “Huge Win” for Kalshi. He added,
Gemini Joins Coinbase To Urge CFTC To Withdraw Event Contracts Proposal“I want to see the opinion before I start dancing on the grave of the administrative state, but this is even more evidence that the best way to deal with regulatory overreach is to FILE MORE LAWSUITS.”
CFTC’s Response
After the court’s decision, the CFTC responded with an emergency motion requesting Cobb to stay her order for 14 days. The stay can forbid Kalshi from listing election markets. The agency mentioned,
“Without the benefit of the Court’s reasoning, the CFTC is unable to make an informed decision whether to appeal, nor is it able to fully brief a motion for stay pending any forthcoming appeal.”
If the stay is approved, Kalshi would be prohibited from offering its election markets until at least late September. Earlier, Coinbase also shared its concern about CFTC’s stance on event contracts. The leading cryptocurrency exchange outlined that their proposed rules could significantly impact the future of predictive event contracts.
