YEREVAN (CoinChapter.com) — Kalshi, a U.S.-regulated prediction market platform, has won its legal case against the Commodity Futures Trading Commission (CFTC), clearing the way for Congressional election betting. With two months left before the 2024 U.S. elections, Kalshi is now allowed to offer prediction contracts on which party will control the U.S. Congress.
Kalshi Gains Approval for U.S. Election Prediction Markets
Kalshi’s legal victory comes after the U.S. District Court ruled in favor of the company, allowing it to offer contracts predicting which political party will control Congress after the elections. Judge Jia M. Cobb of the U.S. District Court for the District of Columbia issued the ruling, granting Kalshi’s motion for summary judgment. As a result, the CFTC’s earlier order banning Kalshi from listing these contracts was vacated.
In a statement, Kalshi said,
“We did it! U.S. election markets are coming to Kalshi.”
This decision allows Kalshi to participate in the U.S. election betting market, a space previously dominated by platforms like Polymarket. The case attracted significant attention from the crypto community, with venture capital firm Paradigm supporting Kalshi through a legal brief.
Legal Battle Against CFTC May Not Be Over
The CFTC had initially blocked Kalshi’s Congressional control contracts, arguing they were akin to unlawful gambling and not in the public interest. Of course, Kalshi disagreed and sued the CFTC, labeling the decision as arbitrary and capricious.
Kalshi vs CFTC Legal Complaint Document. Source: CourtListener
The court sided with Kalshi, with Judge Cobb writing,
“Defendant’s September 22, 2023, order prohibiting Plaintiff from listing its congressional control contracts for trading is hereby VACATED.”
Although Kalshi won this round, the CFTC might appeal the decision. Furthermore, the agency is considering a new rule that would prevent entities it regulates from offering prediction markets on political events. Primarily, there is concern that these markets could undermine the integrity of elections.
Kalshi Wins Summary Judgment Against CFTC. Source: United States District Court for the District of Columbia
Kalshi vs. Polymarket: Competition in Election Betting
Notably, Kalshi’s victory sets the stage for competition with Polymarket, another platform popular in the prediction market space. Polymarket, which operates using cryptocurrency and blockchain, has seen a surge in election betting. According to data from Dune Analytics, Polymarket logged $470 million in volume in August 2024, largely driven by election-related contracts.
Polymarket Monthly Volume and Active Traders Surge. Source: Dune Analytic
Moreover, Polymarket is restricted from dealing with U.S. residents under a CFTC settlement but continues to attract international traders. Kalshi, on the other hand, operates strictly within the U.S. and deals in traditional currency. Above all, this legal victory gives Kalshi the opportunity to capture a share of the U.S. election betting market in the coming months.
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