Despite opposition from regulators, a United States federal appeals court has greenlighted Kalshi, a derivatives exchange, to list event contracts tied to US election outcomes, according to an Oct. 2 court ruling.
The ruling paves the way for election prediction markets — possibly including Web3 platforms such as Polymarket — to operate in the US.
On Oct. 2, the US Court of Appeals for the District of Columbia Circuit ruled against the Commodity Futures Trading Commission’s (CFTC) bid to stop Kalshi from listing derivatives tied to political outcomes on the eve of the US presidential election.
Upward of $1 billion rides on the outcome of the November US presidential election on Polymarket as of Oct. 2, according to its website.
Kalshi event contracts. Source: Kalshi
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In September, Kalshi prevailed in a lawsuit brought against the CFTC in 2023 aimed at overturning an order prohibiting Kalshi from listing political event contracts.
In the order, the CFTC argued the contracts “involve gaming and activity that is unlawful under state law and are contrary to the public interest.”
The CFTC specifically singled out contracts wagering on which US party would control Congress after the November federal elections.
According to the CFTC, these included “cash-settled, binary contracts based on the question: ‘Will
On Sept. 12, the CFTC appealed the court’s decision and sought a court order barring Kalshi from listing any event contracts until the appeal was ruled on.
That would have effectively stopped any political event contracts from trading before the US presidential election.
“The Commission cannot obtain a stay at this time because it has not demonstrated that it or the public will be irreparably harmed while its appeal is heard,” according to the Oct. 2 ruling.
The September federal circuit court ruling took a similar stance, arguing that the CFTC was out of bounds in blocking contracts on broad public interest grounds if they otherwise comply with US financial regulations.
“This case is not about whether the Court likes Kalshi’s product or thinks trading it is a good idea,” the judge said.
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