US Bettors Can Wager on the Elections Following Court Ruling
Legal political betting is returning to the US. A recent Appeals Court ruling in favor of Kalshi, allowing the platform to offer its congressional market, marks a significant moment for political prediction markets.
A presidential voting banner on the US flag. (Source: Dreamstime)
LISTEN TO THIS ARTICLE:This decision not only opens the door for Kalshi to offer a market on congressional races but also potentially any other political market. This also includes high-profile elections such as the 2024 US presidential race.
Related: How Novelty Bets Became the Hot-Button Issue of Election YearThe case drew attention due to the Commodity Futures Trading Commission's (CFTC) concerns regarding the potential impacts such markets might have on election integrity and possible risks of market manipulation. However, the court found that the CFTC did not sufficiently demonstrate that such risks were imminent or likely to occur. Without concrete evidence to back its claims of irreparable harm, the appeals court determined that the CFTC's concerns were speculative in nature, thereby allowing Kalshi to proceed.
One of the court's key observations was the lack of proven harm from existing unregulated election betting markets. Platforms like PredictIt and Polymarket, which already offer political markets, have not been shown to cause the kind of election-related harms the CFTC was worried about. This undercut the agency's argument that a stay was necessary to prevent potential damage.
The court highlighted that the CFTC's arguments were largely theoretical, emphasizing that concerns about election integrity must be grounded in actual evidence rather than hypothetical scenarios. Without such evidence, the court saw no reason to block Kalshi's ability to offer these markets, giving more weight to the argument that election betting, as it currently exists, has not yet posed any demonstrated threat.
This ruling is particularly significant because it could set a precedent for other political betting markets in the future. If Kalshi is allowed to offer a market on congressional races, this could open the floodgates for additional markets on presidential elections, gubernatorial races, or other politically significant events.
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Establishing a New Betting Market
Given that Kalshi is a regulated platform, the court's ruling signals that even markets of high political importance can be offered under appropriate regulatory frameworks, so long as there is no clear evidence of harm. This development could spur other platforms to pursue similar legal pathways, challenging the CFTC's traditional restrictions on such markets and potentially expanding the landscape of political betting.
However, the court did not entirely shut the door on future actions by the CFTC. The ruling allows the agency to renew its request for a stay if more concrete evidence of harm arises.
Essentially, while the court was not convinced by the current arguments, it left room for the possibility that new developments or a stronger case might emerge in the future. This provides a safety net for the CFTC if it can later demonstrate that political betting markets are indeed causing or are likely to cause the types of damage it fears.
The case itself has been an evolving legal battle. On September 13 of last year, Kalshi initially won its case against the CFTC, gaining the green light to post the congressional odds. However, the excitement was short-lived. Just hours after posting the odds, Kalshi was forced to take them down due to a temporary stay granted by the appeals court.
This sudden reversal created uncertainty for the platform and its users, as it was unclear whether or not the congressional market would ultimately be allowed to continue. The recent ruling now clarifies that the appeals court sees no imminent risk in allowing these markets to operate, giving Kalshi more freedom in how it approaches its political offerings moving forward.
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