A federal judge paved the way for Americans to bet on election results, as it ruled in favor of events-based marketplace Kalshi.
The ruling on Thursday dealt a blow to the U.S. Commodity Futures Trading Commission (CFTC), which initially prohibited such betting and appealed the judge's decision to the DC Circuit shortly after it was issued.
Reuters reported that KalshiEX LLC, a predictions marketplace, wanted to put up contracts that would allow users to make bets on the outcome of the elections such as which party will end up controlling the House of Representatives and the Senate.
However, the CFTC did not allow the entity to list as it was concerned about the propagation of activities not in the best interest of the public. It also drew concerns over unlawful gaming.
This prompted Kalshi to seek redress from the court on the grounds that the regulator exceeded authority.
District Court Judge Jia Cobb ruled in favor of Kalshi citing that CFTC exceeded its statutory authority. Cobb said that the subject of the contracts that Kashi wants to put out was elections, which does not fall within the purview of an illicit activity or unlawful gaming.
"This case is not about whether the Court likes Kalshi's product or thinks trading it is a good idea," the judge stated.
"The Court's only task is to determine what Congress did, not what it could do or should do. And Congress did not authorize the CFTC to conduct the public interest review it conducted here," she added.
"Now is finally the time to allow these markets to show the world just how powerful they are at providing signal amidst the noise and giving us more truth about what the future holds," Tarek Mansour, CEO and co-founder of Kalshi, said in a statement released a statement to Reuters.
Opinion on the court's decision varied though. Cantrell Dumas, the director of Better Markets, which is a nonprofit organization that promotes public interest in financial markets, said that the ruling of the court gives priority to profit instead of public interest.
"Allowing Kalshi's political event contracts is a dangerous move that opens the floodgates to unprecedented gambling on U.S. elections, eroding public trust in both markets and democracy," he said.
