CFTC challenge to Kalshi political bets: Appeals court fast-tracks election betting case

• The Commodity Futures Trading Commission's case challenging the legality of Kalshi exchange's political election bet contracts was expedited by a federal appeals court.
• Election contracts that cover presidential election, U.S. Senate races, and control of Congress chambers are being offered by Kalshi and Interactive Brokers.
• More than $7 million in contracts have been secured by Kalshi for the presidential race between former President Donald Trump and Vice President Kamala Harris.

The Commodity Futures Trading Commission's case challenging the right of the event exchange Kalshi to offer U.S. political election contracts has been fast-tracked by a federal appeals court.

The expedited appeal is due to the availability of political contracts on platforms such as Kalshi and another platform, which include bets on the U.S. presidential election, U.S. Senate races, and party control of each chamber of Congress.

Over the weekend, electronic signs in New York City's Times Square showcased Kalshi's presidential election contracts.

The quick appellate schedule requires the CFTC to submit its legal brief by Wednesday and for Kalshi to respond with its brief ten days after Election Day, on November 15. The CFTC will then have until December 6 to respond to Kalshi's brief.

The District of Columbia Circuit Court of Appeals instructed its clerk to arrange oral arguments on the "most suitable date" following the submission of the reply.

Federal appeals court proceedings typically take several months for briefing and oral arguments to be held.

The CFTC had requested oral arguments on Dec. 2.

A commission spokesperson declined to comment on the schedule.

In the Oct. 2 court filing, the CFTC contended that a prompt resolution of the appeal serves the public's interest.

Election contracts are vulnerable to market manipulation and can compromise the integrity of elections, according to the CFTC.

Tarek Mansour, CEO of Kalshi, stated that his company is "assured" that the law permits election contracts.

Mansour stated that he is eager to demonstrate the effectiveness of these markets in promoting election integrity and increasing transparency in the system.

In September, the CFTC lost a lawsuit in U.S. District Court in Washington, D.C., challenging Kalshi's right to offer contracts on the outcome of the November elections.

The D.C. Circuit Court of Appeals temporarily barred Kalshi from accepting congressional control contracts after the commission quickly appealed the ruling.

The appeals court lifted the legal freeze on Oct. 2, as the CFTC had not demonstrated that the commission or the public would suffer irreparable harm without the injunction remaining in effect during the appeal.

Kalshi started providing contracts related to the congressional elections and the presidential race between former President Donald Trump and Vice President Kamala Harris, as well as other races.

By Monday, Kalshi had secured over $7 million in contracts related to the presidential election outcome.

Interactive Brokers started providing political contracts to clients on Oct. 3, with over 1 million contracts traded on the platform.

"Thomas Peterffy, founder of Interactive Brokers, stated that there has been a significant increase in demand for election-related contracts on our platform in a short period. This surge in interest highlights the growing importance of political prediction markets."