A federal appeals court declined to block Wednesday a lower-court decision that allowed betting on 2024 federal elections, a blow to the government agency that argued doing so could undermine election integrity.
The Commodity Futures Trading Commission (CFTC) had asked the appeals court to block the prediction exchange platform Kalshi from offering “Congressional Control Contracts,” which allow buyers to bet on which political party will control the House and the Senate after the upcoming election.
The U.S. District Court for the District of Columbia last month sided with Kalshi, ruling the government agency had exceeded its authority when it tried to block the company from offering a market to bet on election outcomes.
The CFTC warned such contracts “could potentially be used in ways that would have an adverse effect on the integrity of elections, or the perception of integrity of elections.”
While the appeals court found the concerns “understandable,” they ultimately sided with Kalshi in the “close and difficult” case.
“In short, the concerns voiced by the Commission are understandable given the uncertain effects that Congressional Control Contracts will have on our elections, which are the very linchpin of our democracy,” Judge Patricia Millet wrote in the opinion.
“But whether the statutory text allows the Commission to bar such event contracts is debatable, and the Commission has not substantiated that risks to election integrity are likely to materialize if Kalshi is allowed to operate its exchange during the pendency of this appeal,” Millet wrote.
Millet cited several examples of concerns regarding the impact of betting on election integrity, such as political campaigns or proxies encouraging supporters to bet on the outcome of the election or foreign investors bypassing restrictions on foreign trading that Kalshi says it has implemented.
Kalshi Founder Luana Lopes Lara said she was “so grateful” in a post on the social media platform X.
The CFTC declined to comment.
Hundreds of millions of dollars have already been bet on the upcoming election, and the Wednesday decision brings clarity to a legal gray area in which those markets have operated with less than five weeks until the general election on Nov. 5.
“US presidential election markets are legal. Officially. Finally. Kalshi prevails,” Tarek Mansour, one of the company’s founders, wrote in a post on X.