This Week in Prediction Markets: Court Battles, Election Bets, and Rate Cuts

Happy Friday, market movers! It’s been a volatile week for the prediction market industry, with major happenings  across the courtroom, economy, election odds, pop culture, and beyond.

Strap in, here’s what’s happened and what’s buzzing as we head into the weekend!

🏛️ Regulatory check-in

On Thursday, the CFTC and Kalshi met at the United States Court of Appeals for the District of Columbia Circuit, where both were challenged by a panel of judges. 

Kalshi sparred with judges over the definition of gaming, while the CFTC struggled to show that election betting presented “irreparable harm to the public interest.”

The appeal follows Kalshi’s big win at the U.S. District Court on Sept. 12, which allowed Kalshi to launch — albeit briefly— 2024 congressional election markets before the appeals court put them on pause later that day.

The court didn’t give a timetable for a decision, and U.S. election markets remain on hold for now. 

Chris Gerlacher breaks down everything that happened Thursday.

Also read: The Fine Line Between Inside Information and Market Manipulation

🇺🇸 2024 presidential markets surpass $1B on Polymarket

Speaking of election markets, $966 million has been bet on the presidential election winner, plus another $200M on the popular vote, via the unregulated decentralized crypto exchange Polymarket.

Earlier this summer, the CFTC warned Polymarket and other “offshore” exchanges that they would use their enforcement if those exchanges break the law by providing exposure to US customers. 

The race remains close on Polymarket, with Kamala Harris at 51% to win versus Trump at 48%.

US customers can get in on the action legally at PredictIt, where Harris shares are currently trading at 57 cents and Trump 46 cents.

Also read: How Beliefs Become Prices

🏦 More interest rate cuts?

On Wednesday, the Fed cut interest rates for the first time in four years. According to prediction markets, there’s more to come. 

While Fed Chair Jerome Powell says not to expect a return to an era of super low interest rates like we saw at the beginning of Covid, traders on Kalshi forecast a 62% chance of a 25bps cut in November and 52% of a 50bps cut.

How low will rates get by the end of the year?

Read more: What Traders Got Right and What’s Next

🏆 Oscar odds, Swift’s endorsement, and Perry’s new album

It’s not all politics and economics — pop culture markets are abuzz, too, and Dennis Arachov is on top of it all:

• TIFF’s Oscar Influence: The Toronto International Film Festival has reshaped Oscar predictions, with new front-runners and dark horses emerging after receiving critical acclaim at the event.
• Katy Perry’s Chart Prospects: As Katy Perry gears up for new releases, prediction markets are speculating on her potential, or lack thereof, to make noise on the Billboard charts.
• Taylor Swift’s Political Impact: Taylor Swift’s endorsement of Kamala Harris for the 2024 U.S. presidential election is stirring discussions about its influence on voter sentiment and election odds. Is there any?

📈 Market moves: Is Amazon a monopoly?

Odds of courts considering Amazon a monopoly spiked to 55% Friday morning, before returning below 40% two hours later.