The US Commodity Futures Trading Commission (CFTC) is taking a significant step by seeking permission from the court to drop its appeal against prediction market operator Kalshi. This motion, if approved, could pave the way for Kalshi to offer political event contracts without further legal intervention, marking a pivotal shift in the regulation of such markets.
On May 5, the CFTC filed an unopposed motion for voluntary dismissal in the US Court of Appeals for the District of Columbia Circuit, signaling a potential agreement with Kalshi. This move comes in response to a prior ruling that prohibited the CFTC from banning Kalshi from listing political event contracts, including bets on elections.
According to the joint filing, Kalshi has stated that it will “bear its own costs, court fees, and attorney fees incurred” if the court grants the motion to dismiss. Following the filing, Kalshi expressed confidence in the continuity of election markets through a post on X, formerly known as Twitter.
The legal battle commenced when Kalshi sued the CFTC in 2023 after the regulator ordered the platform to cease offering political event contracts. The lower court’s ruling favored Kalshi, prompting the CFTC’s appeal in September 2024.
Understanding the Change in Course
The appeal was primarily addressed before the recent US elections and during the tenure of former acting CFTC chair Caroline Pham, appointed by President Donald Trump. Notably, CFTC Commissioner Summer Mersinger, nominated by President Joe Biden, previously echoed sentiments supporting the validity of election prediction markets.
Kalshi has emerged as a popular platform among crypto users since its launch in 2021, particularly for providing betting opportunities related to the 2024 US election. Despite the CFTC’s concerns about potential market manipulation and public interest risks, the latest motion suggests a shift in regulatory stance under the current administration.
This development signals a notable change in the landscape of prediction markets and regulatory perspectives on political event contracts. As the CFTC reconsiders its approach, the implications for users and the market landscape continue to unfold, marking a critical moment for eager bettors and investors alike.
Related: Kalshi accepts Bitcoin deposits in bid to woo crypto-native users
