On Friday, Nov. 15, Kalshi’s legal team filed its response to its regulator’s appeal. Kalshi, a legal prediction market platform, sued its regulator to offer election contracts in November 2023.
The Commodity Futures Trading Commission (CFTC) lost that case in September 2024, dissolving a stay that prevented Kalshi from offering election contracts. The CFTC filed its appeal shortly after its loss, and the case is now in the D.C. Circuit Court of Appeals.
The Circuit Case will answer two core questions: whether election contracts involve unlawful activity and whether election contracts involve gaming.
The D.C. District Court ruled that election contacts involved neither unlawful activity nor gaming. Whether the D.C. Circuit Court will agree – and whether it will matter – will be answered over the next few weeks.
Old case, new administration
One of the major differences between the district and circuit cases is the expected timeline. The D.C. Circuit Court adopted an accelerated timeline. The CFTC’s response to Kalshi’s latest filing is due by Dec. 6. After that, the circuit court will schedule oral arguments.
The CFTC hoped to schedule oral arguments before the new administration took office and Kalshi’s election contracts settled. Shortly after filing its appeal, the CFTC requested to schedule oral arguments on Dec. 2. The circuit court rejected that request.
Kalshi isn’t the only legal prediction market platform with a case against its regulator. PredictIt, an academic prediction market platform used for research, also has litigation against the CFTC. The CFTC pulled its no-action letter in 2022, which stated that in exchange for certain conditions, PredictIt could offer election contracts. A new CFTC chair could end the ongoing legal battle PredictIt is facing too.
Additionally, the new presidential administration will likely support not only Kalshi but also prediction markets and alternative institutions more broadly. Trump’s team viewed Kalshi’s odds throughout Election Night, and Elon Musk proclaimed his faith in prediction markets several weeks before the election.
Whoever Trump chooses to chair the CFTC, it is likely to be someone sympathetic to the prediction market industry.
