The Commodity Futures Trading Commission (CFTC) has shelved its legal challenge against Kalshi’s offering of election event contracts, in a significant win for the prediction market.
The US derivatives regulator filed a motion for voluntary dismissal with the US Court of Appeals for the DC Circuit yesterday, 5 May, bringing an end to the legal tussle.
The case dated back to November 2023 when Kalshi sued the CFTC after the body said companies were not allowed to offer markets on the outcome of the US presidential election.
After almost a year of legal wrangling and just weeks before last November’s election, Kalshi emerged victorious in the courts, allowing it to continue to push the product in all 50 US states,
That decision opened the door for Robinhood to also launch a prediction market for the election, with Crypto.com likewise taking the leap just before Christmas and adding sports event contracts to its site.
While the latest CFTC decision pertains solely to election event contracts, it could pave the way for sports event contracts to be legally permissible across the US.
There are growing hopes in the prediction markets sector that given Kalshi board member Brian Quintenz has been nominated by President Donald Trump as the next CFTC chair, the administration will take a favourable view on the vertical.
Notably, Trump’s son, Donald Trump Jr, is a Kalshi special adviser.
Kalshi has also successfully challenged legal proceedings launched against it by state regulators in New Jersey and Nevada, allowing it to continue to offer sports event contracts.
Several state regulators have issued cease-and-desist orders to Kalshi, Robinhood and Crypto.com over allegations the prediction markets model is a form of unregulated sports betting.
Taking to LinkedIn to react to the decision, Kalshi CEO Tarek Mansour wrote: “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.
“I am incredibly grateful and proud. This win is yours as much as ours and it is finally official,” he added.
Elsewhere, the CFTC announced yesterday, in a somewhat cryptic press release, that it had placed an undisclosed number of staff on leave.
The body’s statement read: “The CFTC is committed to holding employees to the highest standards, as expected by American taxpayers.
“Pursuant to the president’s executive orders on lawful governance and accountability, the CFTC has placed staff on administrative leave for potential violations of laws, government ethics requirements and professional rules of conduct.
“Investigations are currently ongoing into these matters and the CFTC will provide updates as appropriate.”
The post Kalshi scores win as CFTC drops election event contracts case first appeared on EGR Intel.
Derivatives regulator pulls challenge against prediction market following lengthy legal case in a positive step for the growing sector
The post Kalshi scores win as CFTC drops election event contracts case first appeared on EGR Intel.