Published on: December 9, 2024, 05:16h.
Last updated on: December 9, 2024, 05:16h.
Following the federal appeals court in Washington D.C. rejecting a U.S. regulator’s attempt to prevent prediction platform Kalshi from trading on the U.S. presidential election, the company switched its futures exchange into what the regulator describes as “an online casino.”
According to the latest court filing from the Commodities and Futures Trading Commission (CFTC), the agency criticized Kalshi’s transformation. The CFTC regulates U.S. derivatives markets and oversees Kalshi due to its activities involving events contracts.
Kalshi’s events contracts allow users to speculate on various outcomes, from cryptocurrency prices to election results. The company’s name, Kalshi, means “everything” in Arabic.
Kalshi Challenges Regulator
In October 2022, the CFTC instructed Kalshi to stop offering events contracts related to election outcomes, citing the illegality of betting on political events in the U.S.
Kalshi filed a lawsuit against the regulator, arguing that the CFTC was overstepping its boundaries. After a lower court ruling favored Kalshi in September, the CFTC quickly appealed the decision.
The appeals court issued a temporary restraining order on the election contracts, but later lifted the freeze just before the election.
The CFTC’s court filing stated that Kalshi’s actions post-court decision did not align with their claims of providing valuable insights for predicting political outcomes. The CFTC accused Kalshi of never taking their assertion seriously.
‘Bet the Election’
According to CFTC lawyers, Kalshi wasted no time in promoting its betting offerings after the ruling. They erected a billboard in Las Vegas inviting casino-goers to “Bet the election” with various parlay contracts listed.
The CFTC even referenced Casino.org’s coverage of Kalshi to highlight the gambling nature of the company’s product.
The CFTC concluded that the dispute between Kalshi and the CFTC revolves around the interpretation of words and definitions related to transactions and gaming.
Traders placed bets totaling $132 million through Kalshi on the presidential election.
The CFTC is seeking the appeals court to overturn the lower court’s ruling that found no unlawful activity in Kalshi’s congressional control contracts.