Kalshi Launches US Election Prediction Markets Amid Legal Battle

According to Blockworks, Kalshi has launched prediction markets for the upcoming US election following a court battle with the Commodity Futures Trading Commission (CFTC). The launch occurred after Judge Jia Cobb denied another emergency stay requested by the CFTC. In a hearing on Thursday, Judge Cobb sided with Kalshi, stating she would not grant a stay, referencing arguments made by Kalshi’s attorneys. The CFTC had argued that the contracts could pose a “public interest risk,” but Kalshi’s attorneys contended that delaying the launch could cause the company economic harm. Previously, the CFTC was granted a stay as it asked the judge to reconsider her order. In her opinion on Thursday, Cobb wrote that Kalshi’s congressional control contracts do not involve any unlawful activity under federal or state law, nor do they involve gaming. She explained that Kalshi’s event contracts ask buyers to take a yes/no position on whether a chamber of Congress will be controlled by a specific party in a given term. This question involves elections, politics, Congress, and party control but does not constitute illegal activity. Tarek Mansour, Kalshi’s founder, noted that Thursday marked the first trade on regulated election markets in nearly a century. Kalshi is currently the only legal prediction market in the US. Polymarket, another prediction market, does not operate in the US and settled with the CFTC in 2022, paying $1.4 million for allegedly operating an unregistered platform for trading options contracts. As part of the settlement, Polymarket agreed to ban US users without admitting or denying wrongdoing. During Thursday’s hearing, Kalshi’s lawyers mentioned that blocking Kalshi from allowing election markets would push people to unregulated markets like Polymarket. The CFTC is seeking an emergency stay from the appeals court to prevent the markets from being active while lawyers prepare an appeal. At the hearing, CFTC attorneys warned about potential risks to election integrity.