A federal appeals court in Washington, D.C., cleared the way Wednesday for Americans to bet on the outcome of the 2024 congressional elections.
The appeals court in a decision rejected an effort by the Commodity Futures Trading Commission to prohibit the commodities exchange KalshiEx from offering “Congressional Control Contracts” as the federal agency appealed a lower court’s ruling that gave a green light for such bets.
The CFTC “has failed to at this time to demonstrate that it or the public will be irreparably injured” without a stay on the contracts being offered during that appeal, wrote Judge Patricia Millett of the U.S. Appeals Court for the District of Columbia Circuit.
Millett, who was part of a three-judge panel hearing the case, said the agency could renew its bid to block the contracts pending the outcome of its appeal “should substantiating evidence arise.”
There were no dissents on Wednesday’s 15-page decision in favor of KalshiEx, which offers customers contracts that can hedge the risk of certain events occurring.
The CFTC declined to comment on the ruling, but noted that “this is for our request for an emergency stay. Not the appeal itself.”
CNBC has requested comment from KalshiEx.
The CFTC had barred KalshiEx from listing its congressional contracts on the exchange, which the commission regulates, on the ground that they would violate the laws of many states that ban gambling on elections.
This illustration photo shows money and gambling dice in front of a screen showing political market odds, in Los Angeles on November 1, 2023.
Chris Delmas | Afp | Getty Images
But Judge Jia Cobb in U.S. District Court in Washington, D.C., ruled last month that the the regulator had erred in finding that KalshiEx’s congressional contracts involved gaming or gambling.
Cobb’s ruling was in effect for only about eight hours before the D.C. appeals court stayed it at the request of the CFTC.
But KalshiEx had accepted an unknown number of bets on the congressional elections during that time. The bets offered included ones on the outcome of Republicans winning control of the Senate and Democrats winning control of the House of Representatives.
That administrative stay was lifted in Wednesday’s ruling.
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