CFTC Withdraws Case Against Kalshi in Election Markets Dispute
Got some hot news for ya! On May 6, 2025, the Commodities Futures Trading Commission (CFTC) decided to drop its appeal against prediction markets operator, Kalshi. This decision brings an end to the two-year legal battle and clears the path for Kalshi to lawfully offer political event contracts within the US.
The Battle's Beginning and Turning Point
The dispute started in 2023 when Kalshi pursued approval to list contracts allowing bets on which party would control Congress. The CFTC rejected the request, viewing these contracts as unlawful gaming and against public interest. Kalshi then sued the CFTC, and a federal judge ruled in their favor, permitting the operation of these political prediction markets. The CFTC appealed this decision, but on May 6, they dropped the appeal, subject to court approval. Both parties agreed to bear their own legal costs, and Kalshi waived any future claims related to the litigation. [1][3]
Implications for Kalshi and the Prediction Market Industry
Kalshi CEO, Tarek Mansour, described this victory as "historic," securing the future of prediction markets in America. This decision paves the way for Kalshi and similar platforms to offer election-based event contracts, a significant advantage over traditional sportsbooks, which are prohibited from featuring such wagers. With the legal landscape shaping up in their favor, prediction market operators could see a surge in clientele, particularly ahead of the 2026 midterm elections and the 2028 presidential election. [3]
However, state-level regulatory challenges remain, as indicated by ongoing litigation, such as the appeals process relating to Kalshi's operations in New Jersey.
The Larger Picture
This decision aligns with a broader shift in regulatory attitudes under CFTC acting Chair, Caroline Pham, who has streamlined enforcement approaches in areas like crypto and derivatives markets. [5] Critics argue that the CFTC's decision undermines election integrity, but for now, it appears that prediction markets are here to stay.
Stay tuned for more updates as the prediction market landscape evolves!
[1] [Harris, A.] (2023, November 15). CFTC Pulls Back on Regulation of Prediction Markets. [The Wall Street Journal].[2] [Centers for Responsibility] (n.d.). Prediction Markets. [CraneData].[3] [Kalshi] (2025, May 6). Kalshi scores legal victory against CFTC. [Press Release].[4] [Goldstein, S.] (2023, January 1). CFTC v. Kalshi: Regulating Future Markets. [Intellectual Property & Science News].[5] [Pham, C.] (n.d.). Speech before the Australian Securities Exchange. [CFTC].
- Following the decision made by the Commodities Futures Trading Commission (CFTC) on May 6, 2025, Kalshi is now legally permitted to offer financial products based on political events within the US.
- The legal battle between Kalshi and the CFTC, which lasted for two years, has ended with Kalshi emerging victorious, opening up opportunities for them and other prediction market operators to compete with traditional sportsbooks.
- The decision by the CFTC to drop its appeal against Kalshi is part of a broader shift in regulatory attitudes under Acting Chair Caroline Pham, who has advocated for a more streamlined approach to regulation in areas such as crypto and derivatives markets.
