Date: December 31, 2024, 09:57h.
Last updated on: December 31, 2024, 09:57h.
The US federal government is reiterating that online betting exchanges functioning as derivative financial markets are prohibited from offering event contracts related to criminal activities.
Kalshi and other prediction-based online exchanges fall under the regulation of the US Commodity Futures Trading Commission (CFTC). The CFTC recently informed Kalshi and similar platforms that contracts based on criminal events are not allowed.
CFTC Regulation 40.11 prohibits event contracts related to terrorism, assassination, war, gaming, or illegal activities. The CFTC states that such markets are “contrary to the public interest.”
The warning to Kalshi came after the platform introduced contracts involving Luigi Mangione, the suspected individual in the killing of UnitedHealthcare CEO Brian Thompson on Dec. 4.
Contracts Withdrawn
Shortly after Mangione’s arrest, Kalshi launched contracts regarding his future, including extradition predictions and guilt pleas. These contracts were removed less than 48 hours later following regulatory intervention.
Although platforms like Kalshi can introduce controversial topics without prior approval, the CFTC has the authority to halt or withdraw contracts that violate Regulation 40.11.
While CFTC-regulated exchanges must comply with the rules, sites like Polymarket continue to offer contracts on Mangione without such restrictions.
Over $441K has been wagered on Polymarket’s question, “Is Luigi Mangione’s YouTube channel real?”
Continued Controversy
Despite recent court rulings allowing prediction markets like Kalshi to operate, critics argue against the industry’s ethics and legality.
Financial policy expert Cantrell Dumas called it “straight gambling” and criticized the practice of betting on serious criminal matters.
The future of such exchanges may favor deregulation under the upcoming government administration, with promises of reduced oversight.