The case dates to November 2023, when Kalshi sued the CFTC after it looked to clamp down on its election bets product in the lead-up to the 2024 presidential election.
The company ultimately proved successful in securing a ruling from the court, later upheld on appeal, permitting it to continue offering the contracts ahead of election day.
Kalshi CEO Tarek Mansour said on LinkedIn: “Election markets are here to stay. Prediction markets have been banned, censored, limited, and pushed out for decades. This win solidifies their right to exist and thrive.
“It really took a village. Thank you to everyone who was part of this, who stuck with us through the hard times, who traded our markets since early days, who sent countless comment letters, and who fought relentlessly on the frontline alongside Kalshi.”
Kalshi’s victory on this matter follows a significant reorientation in policy from the Trump istration, which is generally considered to be much more friendly to event contracts than was previously the case.
In February, Trump nominated Kalshi board member Brian Quintenz as the regulator’s new chair, while Donald Trump Jr. has a role with the company as an advisor.How will the CFTC treat sports contracts?
Since the election Kalshi, alongside other platforms like Crypto.com and Robinhood, has been further pushing the boundaries of the law via its offering of sports event contracts.
While Kalshi claims these are permitted under the federally regulated derivatives framework its critics, including state gaming regulators and many traditional US gambling interests, argue these are effectively sports betting by another name.
While the CFTC was set to evaluate the arguments around both election and sports event contracts at its previously planned prediction markets roundtable on 30 April, the meeting was mysteriously cancelled, leaving its official position murky.
If Kalshi can successfully offer sports contracts with federal approval, it could dramatically shake up the sports betting market, with the ability to take bets across the US a significant departure from the existing state-by-state model for betting.
Alongside the legal update, the CFTC also issued a release yesterday stating it has placed some staff on leave for “potential violations of laws, government ethics requirements and professional rules of conduct”.
It is unknown if this is related to the prediction markets matter, but the regulator said investigations are ongoing and it intends to provide updates when appropriate.
