As a seasoned crypto investor with over two decades of market experience under my belt, I find myself deeply intrigued by this ongoing legal battle between Kalshi and the U.S. Commodity Futures Trading Commission (CFTC). Having witnessed numerous market fluctuations and regulatory changes, I can appreciate the complexity of these issues.
As a researcher, I posit that my analysis indicates a potential oversight on the part of the federal judge when they permitted Kalshi, a prediction market provider, to list and trade election contracts. This assertion is based on the arguments presented by attorneys from the U.S. Commodity Futures Trading Commission in a court filing to an appellate court on Wednesday. These arguments echo many of the points they initially made before the lower court.
In the lawsuit filed by Kalshi against the CFTC, the presiding district court judge disregarded the meanings of terms as defined under the Commodity Exchange Act and, allegedly without justification, prohibited the agency from investigating transactions related to gambling.
Last month, a judge decided that the Commodity Futures Trading Commission (CFTC) was unable to prevent Kalshi from listing election contracts. The regulatory body then asked an appeals court to halt the company’s product launch until their appeal was resolved. However, the judges in that court determined that the CFTC had not proven there would be irreversible damage.
Consequently, Kalshi has compiled several event contracts related to the 2024 election, covering topics such as the identity of the presidential winner and the victor in different states.
In Wednesday’s submission, it was pointed out that the Commodity Futures Trading Commission (CFTC) may not have employed a broad interpretation when they denied Kalshi’s proposal to establish marketplaces for elections, by stating that their definition of gaming might not be extensive enough.
In their recent submission, the Commodity Futures Trading Commission referenced the new contracts, presenting an argument analogous to the one they made when they requested an immediate halt to the district court’s decree allowing Kalshi to list these contracts.
In simpler terms, the filing states that Kalshi has authorized a wide range of bets related to elections, such as the presidential election results, popular vote winner, victory margins, and the state with the closest margin. Furthermore, their website hints at offering multiple election outcome combinations (referred to as parlays in sports betting) at a later time.
During the height of the 2024 election betting surge, Kalshi, one of the two U.S.-approved prediction markets that settles trades in USD (the other being Interactive Brokers’ ForecastEx), was largely sidelined as it waited for its case to be resolved. Meanwhile, the crypto-based, offshore platform Polymarket emerged as the dominant player in this field.
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2024-10-17 21:53