The U.S. Commodity Futures Trading Commission (CFTC) is in a legal battle with prediction market purveyor Kalshi over the regulation of election betting. Kalshi argues that only Congress, not the regulator, has the authority to ban election betting. The CFTC attempted to block Kalshi from listing certain event contracts that allowed traders to bet on the outcome of political events, claiming it was unlawful and against the public interest.
Kalshi sued the CFTC, alleging that the regulator exceeded its authority and violated the Administrative Procedure Act. The District Court ruled in favor of Kalshi, stating that the CFTC’s interpretation of the law was too broad and vacating the order blocking Kalshi’s contracts. The CFTC requested a stay of the order, which was denied, and an appeal to block election-related contracts was also denied by a federal appeals court.
Now, the CFTC is appealing the District Court’s ruling in an attempt to broaden the definition of gaming to include political contests, effectively banning election betting. Kalshi argues that the CFTC’s decision to prohibit its contracts was beyond its authority and that only Congress can authorize such a ban by adding elections to the list of prohibited activities in the Commodity Exchange Act.
Kalshi’s lawyers are urging the appellate court to affirm the District Court’s judgment, stating that Congress has not given the CFTC the authority to regulate election prediction markets. The CFTC’s response to Kalshi’s brief is due on Dec. 6.
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