Regulator Accuses Kalshi of Operating Like Online Casino During Election Trading
The CFTC claims prediction platform Kalshi transformed into an "online casino" immediately after winning a court battle to offer presidential election trading.
According to recent CFTC court filings, Kalshi quickly pivoted its marketing strategy after a federal appeals court allowed it to offer election-related contracts. The company erected a Las Vegas Strip billboard promoting "LIVE odds" and encouraging people to "Bet the election."
Professional couple posing in office
The CFTC, which regulates U.S. derivatives markets including Kalshi's events contracts, had previously ordered the company to stop offering election-related products in October 2022, citing laws against political betting. Kalshi challenged this decision in court, initially winning in September before facing an appeal.
While Kalshi argued its election markets provide valuable political outcome insights for economic risk management, the CFTC claims the company's subsequent actions revealed different intentions. The regulator noted Kalshi's introduction of "Parlay Contracts" and its CEO's public celebration when the platform surpassed FanDuel's App Store ranking.
The case has resulted in $132 million worth of election-related trades on Kalshi's platform. The CFTC is now requesting the appeals court to reverse the lower court's ruling that Kalshi's congressional control contracts are legal and don't constitute gaming activity.
The regulator argues this case fundamentally challenges Kalshi's interpretation of key terms like "transaction," "contest," and "gaming," suggesting the company has created its own definitions to circumvent regulations.