CFTC Wants to Withdraw Appeal of Kalshi, Paving the Way for the Platform to Provide Political Event Contracts, Especially Regarding the US Presidential Election.
On May 5th, the Commodity Futures Trading Commission (CFTC) unexpectedly filed a motion with the District of Columbia Court of Appeals to withdraw its appeal against the Kalshi prediction market platform, marking a legal turning point that could set a precedent for political event contracts in the US - especially contracts related to presidential election results.
In the "unopposed motion for voluntary dismissal of appeal", the CFTC did not specify a reason, but observers believe this move may reflect an out-of-court settlement between the regulatory agency and Kalshi. Notably, Kalshi agreed to fully cover all legal expenses if the CFTC's request is approved by the court.
Immediately after, on May 6th, Kalshi posted on X (formerly Twitter): "Election markets will continue to exist" – indicating confidence that election prediction contracts will soon be operational again.
The legal confrontation between the two parties began in 2023 when Kalshi sued the CFTC after the agency issued a ban on the platform's deployment of political event prediction contracts. Kalshi initially won at the trial court, forcing the CFTC to appeal in September 2023.
The CFTC's change in stance occurs against the backdrop of significant political shifts in the US and ongoing high-level personnel adjustments within the agency. Particularly, the case is being handled primarily before the 2024 presidential election and before Caroline Pham – a personnel appointed by President Donald Trump – is set to assume the role of Interim Chair of the CFTC. This raises speculation about potential policy direction changes under new leadership.
Previously, in February, CFTC Commissioner Summer Mersinger – nominated by former President Joe Biden – publicly supported Kalshi's perspective, stating that election result prediction markets are "an indispensable part" of the modern financial ecosystem.
Established in 2021, Kalshi quickly attracted attention from investors and users, especially in the cryptocurrency sector, through betting products related to political developments – notably the 2024 US presidential election.
Although the CFTC previously warned that such contracts could lead to "large-scale market manipulation" and threaten public interests, the current appeal withdrawal indicates a significant shift in the perspective of the US derivatives market oversight agency.
