The U.S. Commodity Futures Trading Commission (CFTC) has moved to voluntarily dismiss its appeal against Kalshi, effectively allowing the New York-based derivatives trading platform to continue offering contracts that let Americans bet on election outcomes.

CFTC Drops Appeal in Kalshi Election Betting Case

In a filing with the U.S. Court of Appeals for the D.C. Circuit on Monday, the CFTC requested to drop its appeal following a 3-0 commission vote, with one commissioner abstaining. The agreement stipulates that each party will bear its own costs and fees, with KalshiEX LLC waiving all legal claims arising from the litigation.

Tarek Mansour
Tarek Mansour

"Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off," said Tarek Mansour, CEO and co-founder of Kalshi, in a statement.

The decision marks a significant development in the regulation of prediction markets and event-based contracts in the United States. Kalshi currently offers contracts on various political outcomes, including potential 2028 presidential nominees and specific Senate races.

CFTC vs. Kalshi

The dispute began in June 2023 when Kalshi sought CFTC permission to list contracts allowing Americans to bet on which party would control the House of Representatives and Senate. The CFTC initially prohibited these contracts, citing concerns about unlawful gaming and public interest issues.

Kalshi responded by filing a lawsuit, arguing the CFTC had exceeded its authority. In September, D.C. District Court Judge Jia Cobb ruled in Kalshi's favor, determining that Congress had not authorized the CFTC to conduct the public interest review that led to the ban.

Although the CFTC immediately appealed and secured a temporary stay, the appeals court later lifted the freeze, allowing Kalshi to proceed with offering election-related contracts while the appeal was pending.

“Betrayal of the Public Interest”

The CFTC's decision to drop its appeal has drawn criticism from financial reform advocates. Better Markets called the move "a stark betrayal of the public interest," arguing that allowing betting on election outcomes threatens electoral integrity and could lead to market manipulation.

In January, Kalshi named Donald Trump Jr. as a strategic advisor to the firm, further highlighting the company's connections to the political sphere as it expands its prediction market offerings.

State regulators have also stepped in. As reported by FinanceMagnates.com in late March, Nevada—America’s gambling hub and a major revenue earner from Las Vegas—has raised concerns over Kalshi’s contracts.

Event Contracts to Become “Trillion Dollar Asset Class”

Prediction markets aren’t just about elections. Every day, thousands of users place bets through Kalshi and its partner companies—including retail trading giant Robinhood—on a wide range of future events. These range from Bitcoin’s end-of-session price and the release date of GTA 6, to the outcomes of basketball games.

And as FinanceMagnates.com has learned, these markets are attracting significant capital. In March this year, Kalshi’s March Madness contracts on the NCAA basketball tournaments recorded a record-breaking $200 million in trading volume.

Kalshi

Jack Such of Kalshi, who oversees Business & Media Development, told FinanceMagnates.com that prediction markets have shown “an astronomical rate of growth.” In his view, event contracts “will become a trillion-dollar asset class.”

Source: Finance Magnates