Published on: October 2, 2024, 06:31h.
Last updated on: October 2, 2024, 06:31h.
Financial exchange and prediction platform Kalshi has relaunched its betting markets on the US presidential election after a federal appeals court in Washington D.C. denied a bid by the Commodity Futures Trading Commission (CFTC) to halt the markets, citing concerns about election integrity.
Kalshi’s events contracts are regulated by the CFTC, allowing users to speculate on the outcome of various events, such as the Oscars or congressional control after an election, by betting on “yes” or “no” outcomes.
‘New Era’
The court’s decision marks the first time Americans can participate in regulated betting on the election, signaling a new era for financial markets according to Kalshi CEO Tarek Mansour.
In October 2022, the CFTC prohibited Kalshi from offering election betting, which led to a legal battle. Kalshi argued that the CFTC exceeded its jurisdiction.
In early September, a lower court ruled in favor of Kalshi, allowing the platform to briefly offer election bets. However, the CFTC appealed and froze the contracts. Now, the freeze has been lifted.
While Kalshi asserts its contracts provide valuable election forecasting data, the CFTC remains cautious due to past manipulation risks, such as a large bet on Mitt Romney in 2012 leading to the closure of a platform.
Romney Trader
An unidentified trader’s significant bet on Romney raised concerns about manipulation, ultimately influencing the CFTC’s decision to regulate such markets.
Economists believe the trader aimed to impact public perceptions for campaign purposes by betting on Romney’s victory.
Despite the CFTC’s concerns, the appeals panel questioned the ban on event contracts and the evidence of harm to election integrity, allowing Kalshi to continue operating with a warning of possible future pauses if harm is proven.