Kalshi files brief to appeals court: Only Congress has the power to ban election betting, not the CFTC

Odaily News Prediction market Kalshi argued in a recent court filing that the U.S. CFTC may not like election betting, but only Congress has the power to ban it. Kalshi is currently involved in a legal dispute with the CFTC. Last September, the CFTC tried to prevent the prediction market from listing certain event contracts that allow traders to bet on which party will control the House of Representatives or the Senate after the November election. The regulator said that the contracts proposed by Kalshi involved "gaming" and "activities that are illegal under state law" and were therefore "contrary to the public interest." Kalshi then sued the CFTC in the District of Columbia, accusing the agency of exceeding its statutory authority and violating the Administrative Procedure Act (APA) when it tried to ban election prediction markets. In its recent filing, it said the CFTC “concocted a Goldilocks definition of ‘gaming’ that only covers betting on ‘contests’ (including elections) and not other contingencies, an arbitrary, outcome-oriented zoning without any legal basis.” The district court sided with Kalshi, with Judge Jia Cobb granting her summary judgment, rejecting the CFTC’s interpretation of the Commodity Exchange Act (CEA) as “too broad” and vacating the CFTC’s order blocking Kalshi’s contracts. After Cobb issued her ruling, the CFTC asked her to stay the order pending appeal, which Cobb refused. When the CFTC subsequently asked the U.S. Court of Appeals to temporarily block contracts for election-related activities, the appeals court also rejected that request, unanimously deciding to deny the CFTC’s emergency stay motion and arguing that the CFTC did not provide a “specific basis” to conclude that election contracts could harm the public interest. Now, the CFTC is formally appealing this ruling. The appeal comes as the CFTC seeks to expand the definition of gambling to include "political contests," which, if passed, would effectively ban election betting. In a brief filed last Friday, Kalshi reiterated the arguments made to the lower court and asked the appeals court to affirm Cobb's ruling. The CFTC's response to Kalshi's brief is due by December 6. (CoinDesk)