U.S. Election Betting Delay Would Be ‘Devastating’ to Kalshi, Firm Says

On Sunday, the New York-based firm contested the Commodity Futures Trading Commission’s urgent request to halt its contract listings for another fortnight. According to Kalshi, this motion is without merit and granting it would inflict “severe damage” on their company.

The company informed the U.S. District Court for the District of Columbia that a potential delay, which they believe the agency might try to extend indefinitely, would be catastrophic for Kalshi as its entire future is tied to this legal case and these specific markets.

Previously, the Commodity Futures Trading Commission (CFTC) prohibited Kalshi from listing contracts predicting which party would hold control of each house of Congress following the election. The CFTC argued that such contracts constituted illegal gambling and were not in line with the public’s best interests. In response, Kalshi filed a lawsuit, claiming the regulator’s decision was unreasonable and arbitrary.

On Friday, Judge Jia M. Cobb made a decision aligning with Kalshi. However, the reasoning behind this decision was not explained at the time, as the judge mentioned she would provide an explanation in a future written opinion. The date for publishing this opinion has yet to be disclosed.

On its website, Kalshi proudly announced: “We’ve achieved it! U.S. election markets will be available on Kalshi now.

14 hours after the incident, the Commodity Futures Trading Commission (CFTC) submitted an emergency request asking Judge Cobb to delay her ruling for 14 days, following the release of the decision’s explanation. The agency stated that without understanding her rationale, they are unsure whether they should contest the verdict.

Should it be approved, the stay would postpone Kalshi from listing election markets no sooner than late September. This year’s election betting surge has left the dollar-settling company on the sidelines due to its exclusion.

As an analyst, I’m stating that the Commission clearly and legitimately suffered a legal loss. It ought not to exploit procedural loopholes by stretching out time in an attempt to convert a defeat into a technical victory.

Kalshi stands as the sole CFTC-approved prediction market functioning within the United States. It offers contracts on a diverse array of events, such as whether US student test scores might improve or deteriorate, and forecasts regarding bitcoin’s maximum value for this year. (For clarity: All trades are settled in USD.)

As an analyst, I would rephrase it as follows:

Despite this, it appears that PredictIt and Polymarket are gradually taking a larger portion of the market away from Kalshi, who operates within the law, as they stated in court on Sunday.

[While Kalshi has been patiently awaiting the legal process to conclude, unregulated entities such as Polymarket have seized the opportunity to establish themselves as market leaders,” Kalshi stated. “Further postponements could potentially prevent Kalshi from effectively competing in this sector.”]

Through various submissions such as amicus briefs and comments, scholars, investors, businesses, and other concerned parties have expressed their views on a related Commodity Futures Trading Commission (CFTC) proposal. They argue that election contracts offer mechanisms to manage risk and supply the public with essential data for making accurate forecasts.

Kalshi stated, “For over a year, the public has yet to receive these advantages due to the CFTC’s unlawful directive. With the election less than two months away, it’s crucial that we see these benefits become a reality as soon as possible.

In response to the court’s decision supporting Kalshi, Better Markets, an advocacy organization, expressed concern, stating that this step could potentially pave the way for wagering on U.S. elections, posing a risk to democracy and market integrity.