TechFlow news, November 19 — According to Coindesk, prediction market Kalshi argued in a recent court filing that while the U.S. Commodity Futures Trading Commission (CFTC) may dislike election betting, only Congress has the authority to ban it.
Kalshi is currently embroiled in a legal dispute with the CFTC. In September last year, the CFTC attempted to block the prediction market from listing certain event contracts that would allow traders to bet on which political party will control the House of Representatives or the Senate following the November elections. The regulator claimed that Kalshi’s proposed contracts involved "gaming" and "activities illegal under state law," thus "contrary to the public interest."
Kalshi subsequently sued the CFTC in the District of Columbia, alleging that the agency overstepped its statutory authority and violated the Administrative Procedure Act (APA) in attempting to prohibit election prediction markets. In its latest filing, Kalshi stated that the CFTC had "invented a 'Goldilocks' definition of 'gaming'—one that covers wagers on 'contests' (including elections), but not other contingent events—a result-driven, arbitrary line-drawing with no basis in law."
A district court ruled in favor of Kalshi, with Judge Jia Cobb granting summary judgment, rejecting the CFTC's interpretation of the Commodity Exchange Act (CEA) as being "unreasonably broad," and vacating the CFTC's order blocking Kalshi's contracts.
After Cobb issued her ruling, the CFTC requested she stay the order during appeal, which Cobb denied. When the CFTC later asked the U.S. federal appeals court to temporarily block election-related activity contracts, the appellate court also rejected the request, unanimously denying the CFTC's emergency stay motion, arguing that the CFTC failed to provide "concrete grounds" to conclude that election contracts could harm the public interest.
Now, the CFTC has formally appealed this decision. The appeal comes as the CFTC seeks to expand the definition of gaming to include "political contests," which, if adopted, would effectively ban election betting.
In briefing submitted last Friday, Kalshi reiterated its arguments made to the lower court and urged the appeals court to affirm Cobb's ruling.
