U.S. Election Betting Delay Could Devastate Kalshi, Firm Warns

Kalshi, a U.S. prediction market platform, has warned that any delay in allowing it to list election betting contracts could be devastating for the company. The firm recently won a lawsuit against its regulator, the Commodity Futures Trading Commission (CFTC), but faces further legal hurdles that could impact its operations before the upcoming U.S. elections on November 5.

Key Takeaways

• Kalshi warns that delays in listing election betting contracts could cause irreparable harm.

• The CFTC has filed an emergency motion to delay Kalshi's ability to list these contracts.

• Kalshi argues that further delays could prevent it from competing in the market.

Legal Battle with the CFTC

Kalshi recently won a lawsuit against the CFTC, which had previously barred the company from listing election betting contracts. The CFTC argued that such contracts would amount to unlawful gaming and be contrary to the public interest. Kalshi challenged this decision, calling it arbitrary and capricious.

In a ruling last Friday, Judge Jia M. Cobb sided with Kalshi but did not provide her rationale, which she said would be detailed in a subsequent opinion. The CFTC has since filed an emergency motion to delay the implementation of this ruling for another 14 days, arguing that it needs time to decide whether to appeal.

Impact on Kalshi

Kalshi has stated that any further delays would be devastating for the company. The firm has staked its future on this litigation and the ability to list election betting contracts. Kalshi argues that the CFTC's motion is meritless and that granting it would cause irreparable harm.

"That delay—which the agency would assuredly try to parlay into another, then another, until it is too late—would be devastating for Kalshi," the company told the U.S. District Court for the District of Columbia.

Market Competition

Kalshi is the only CFTC-regulated prediction market in the U.S. It lists contracts on a variety of events, from U.S. students' test scores to Bitcoin prices. However, it faces competition from other platforms like PredictIt and Polymarket. PredictIt operates under a narrow regulatory exemption, while Polymarket is barred from doing business with U.S. residents under a settlement with the CFTC.

Kalshi argues that these unregulated operations have been accumulating market share at its expense. "Further delays may make it impossible for Kalshi to meaningfully compete in this space," the company said.

Public Interest and Opposition

Supporters of election betting contracts argue that they provide ways to hedge risk and offer valuable information for forecasting. "The public has already been denied these benefits for over a year," Kalshi said. "And with the election now fewer than 60 days away, there has never been a more important time for those benefits to materialize."

However, not everyone agrees. Better Markets, a lobbying group, called the judge's ruling a "dangerous step towards allowing gambling on U.S. elections, threatening democracy and the integrity of our markets."

Conclusion

The future of Kalshi hangs in the balance as it awaits further legal decisions. The company remains optimistic but warns that any additional delays could be catastrophic. The coming weeks will be crucial for Kalshi as it navigates this complex legal landscape.

Sources

• U.S. Election Betting Delay Would Be 'Devastating' to Kalshi, Firm Says, CoinDesk.

• El retraso de las apuestas electorales en EE.UU. sería "devastador" para Kalshi, según una empresa, CoinDesk.

• Atraso nas apostas eleitorais dos EUA seria "devastador" para Kalshi, afirma empresa, CoinDesk.

• Затримка ставок на вибори в США буде «руйнівною» для Kalshi, каже фірма, CoinDesk.

• Компания заявляет, что отсрочка ставок на выборы в США будет «разрушительной» для Калши, CoinDesk.