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CFTC Pleads With Judge to Block Kalshi Election Contracts for 14 Days
The agency says it can't make "an informed decision" about whether to appeal the judge's decision in Kalshi's favor until it knows her as-yet-unpublished rationale.
Updated Sep 7, 2024, 4:41 a.m. Published Sep 7, 2024, 4:38 a.m.
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Hours after losing a long-running court case filed by U.S. prediction market platform Kalshi, regulators are making a hail Mary pass.
Late Friday, the Commodity Futures Trading Commission filed an emergency motion asking a federal judge to grant a temporary stay of her decision in Kalshi's favor. The stay would prevent Kalshi from listing election markets for at least 14 days.
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Last year, the CFTC forbade Kalshi from listing contracts betting on which party would control each house of Congress after the November election. Such contracts, the agency said, would amount to unlawful gaming and would be "contrary to the public interest." Kalshi then sued, calling the regulator's decision "arbitrary [and] capricious."
In a ruling handed down Friday, Judge Jia M. Cobb, of the U.S. District Court of the District of Columbia, sided with Kalshi but did not give her rationale, which she said she would spell out in a subsequent opinion. She did not say when that opinion would be published.
Kalshi triumphantly declared on its website: "We did it! U.S. election markets are coming to Kalshi."
The CFTC then filed its emergency motion asking Cobb to stay her order for 14 days following publication of the opinion.
"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," the agency wrote.
If granted, the stay would mean Kalshi wouldn't be allowed to list its election markets until late September at the earliest. The company, which settles trades in U.S. dollars, has been locked out of this year's election betting boom, dominated by crypto-based rival Polymarket, which is barred from serving U.S. residents under its own settlement with the CFTC.
A Kalshi spokesperson did not immediately respond to a request for comment late Friday.
Read more: Kalshi Cleared to Offer Congressional Prediction Markets in Victory Against CFTC
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CFTC's Selig opens legal dispute against states getting in way of prediction markets
Commodity Futures Trading Commission Chairman Mike Selig fired a legal warning shot defending his agency's jurisdiction over the event contract space.
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- U.S. Commodity Futures Trading Commission Chairman Mike Selig directed his agency to file an amicus brief declaring his federal agency has authority over the U.S. prediction markets.
- Though the CFTC once fought a legal resistance against such firms as Polymarket and Kalshi, the agency has embraced them during the administration of President Donald Trump, whose son has worked as a paid adviser for the leading companies.
- As Selig defends his agency's jurisdiction in court, he's also pursuing new prediction markets rules for the U.S.
