The federal district court judge overseeing Kalshi's lawsuit against the Commodity Futures Trading Commission (CFTC) "was wrong on every point" in allowing the platform to list and trade bets on election outcomes, according to the regulator.
In a filing submitted to the Washington, D.C. appeals court on October 16, the CFTC said the federal court had ignored the "clear meaning" of provisions in the Commodity Exchange Act (CEA) and unjustifiably prevented the regulator from properly scrutinizing certain types of transactions.
The regulator argued the court had made "serious errors" in considering key details on whether Kalshi should have been permitted to list political event contracts.
The CFTC said the court had "disregarded or overlooked" straightforward definitions of what constitutes "gambling" or "event-focused" contracts or transactions in allowing Kalshi to list election outcome bets on its platform.
The CFTC said the court "erred" on several key definitions in its case against Kalshi. Source: CourtListener
Kalshi sued the CFTC in November 2023, seeking to overturn a ban on Kalshi listing political event contracts.
Kalshi won its case against the CFTC in September, with a federal court in Washington, D.C. ruling that the commodity regulator would not be allowed to prevent Kalshi from listing political election contracts.
However, the CFTC appealed that decision on September 6 and requested an "emergency stay" to block Kalshi from listing political contracts until the appeal outcome is decided.
On October 2, the U.S. Court of Appeals for the District of Columbia Circuit denied the CFTC's appeal, and on October 7 Kalshi was officially allowed to list its U.S. election outcome betting market.
After winning against the CFTC, Kalshi has listed dozens of election betting contracts, including bets on the presidential election outcome, the popular vote winner, and which state will have the narrowest margin of victory.
In its latest filing, the CFTC said Kalshi's election contracts are akin to gambling and should be prohibited from being listed in the U.S.
"Kalshi's website also previews other contracts, including what they call 'parlays' (a sports betting term) on multiple different election outcomes, as 'coming soon,'" according to the CFTC.
In a filing on October 11, the supervising judge agreed to expedite the final decision on the CFTC's appeal, but the CFTC's final report is not required until December 6, about a month after the election.
Due to the ongoing legal proceedings, Kalshi has been forced to wait while other betting markets like Polymarket have racked up billions in betting volume.
