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A United States judge has ruled in favor of Kalshi, a platform known for offering derivatives tied to real-world events. This ruling allows Kalshi to introduce derivatives contracts for betting on the results of the upcoming U.S. elections, scheduled for November 2024. The decision effectively overturned a previous order from the U.S. Commodity Futures Trading Commission (CFTC), which had sought to block such activities.
This decision has been heralded as a victory for Kalshi and the broader industry. Jake Chervinsky, chief legal officer at Variant Fund, took to social media platform X, calling it a “HUGE win.”
Chervinsky added that while the ruling was a positive step, he would like to review the court’s full opinion before celebrating, stating that this case highlights how lawsuits can effectively push back against regulatory overreach.
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CFTC’s Concerns Overturned
The CFTC had previously argued that allowing people to bet on U.S. election outcomes would undermine the integrity of the democratic process. They also noted that in certain U.S. states, election betting is considered illegal. However, the court disagreed, with Judge Jia Cobb of the U.S. District Court for the District of Columbia ruling that Kalshi’s election contracts could legally be offered.
The judge’s ruling marks the first time in over a century that election-related markets will be legally permitted in the U.S.
Regulatory Battle Not Over
While Kalshi’s win marks a turning point, the regulatory battle may not be over. The CFTC retains the option to appeal the decision. If they choose to do so, the legal process could extend further, possibly delaying Kalshi’s election offerings until after the court’s final decision.
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This ruling also resonates with ongoing debates surrounding decentralized prediction markets. Recently, Gemini co-founder Cameron Winklevoss urged the CFTC to withdraw a proposed regulation that would ban all event contracts in the U.S. This proposal would impact platforms like Polymarket, which hosts prediction markets for a variety of events, including political outcomes.
Kalshi’s court victory may inspire similar legal challenges from other platforms, solidifying the role of prediction markets in the U.S. economy.
