A U.S. federal appeals court has put a stop to Kalshi’s newly launched political prediction markets following a request for an emergency stay from the Commodity Futures Trading Commission. This decision comes after the regulator lost a similar motion to a lower-level judge.
Last week, Judge Jia Cobb of the District of Columbia court ruled that the CFTC had overstepped its bounds by prohibiting Kalshi from offering U.S. political prediction markets. These markets involve bets on various political outcomes, such as which party will control the House of Representatives or who will win the White House. Kalshi, the plaintiff in the case, argued that the CFTC’s ban was arbitrary.
Initially, the CFTC sought to prevent Kalshi from listing any contracts while awaiting Judge Cobb’s full opinion. However, the judge denied this request, allowing Kalshi to list its first U.S. political prediction markets. The CFTC then filed an emergency motion with the appeals court to halt the markets while it considers whether to appeal the ruling.
Trading on Kalshi’s contracts, which asked about the potential winners of the House and Senate, was suspended as of Thursday night. The CFTC claimed that Kalshi rushed to launch these contracts before the agency could file a motion for a stay pending appeal.
In response, Kalshi’s attorneys argued against the need for an administrative stay, stating that Judge Cobb’s decision was based on the fact that elections do not constitute “gaming” or unlawful activity. The appeals court has ordered Kalshi to halt its contracts while it reviews the motion, with deadlines set for responses from both parties.
Meanwhile, the CFTC is in the process of implementing a rule to ban political prediction markets altogether in the U.S. due to concerns about fraud in these markets, particularly during elections. Judge Cobb acknowledged these concerns but focused her opinion on the specific case against Kalshi.