Kalshi is seeking to enable users to place bets on the political party that will gain control of Congress following an election.
The U.S. Commodity Futures Trading Commission (CFTC) has initiated a formal review and public comment period to assess the proposed contracts of prediction market platform Kalshi, which allow users to bet on the party that will control Congress. As part of this process, the CFTC canceled a scheduled public meeting to discuss the matter.
The CFTC announced on Friday night that it has initiated a 90-day review of KalshiEX LLC’s self-certified contracts, which allow users to bet on the major political party that will gain control of Congress after the upcoming election. At the end of the 90-day period, the CFTC will make a decision or may seek an extension.
The CFTC has additionally declared a 30-day public comment period to gather input on the contracts, posing 24 questions related to their nature. These questions inquire whether the contracts align with CFTC rules on gaming, the legality of the proposed betting, comparisons to previous endeavors, and more.
The CFTC had initially scheduled a public meeting for June 26 to determine whether to proceed with the review. However, a subsequent press release on Friday announced the cancellation of the meeting.
Last year, Kalshi suggested that the CFTC would approve its political event contracts ahead of the 2022 midterm elections in the United States. However, Bloomberg reported that CFTC staff subsequently recommended rejecting the contracts. Kalshi then withdrew its proposal and later refiled it, aiming to address the concerns raised by the regulators.
CFTC Commissioners Summer Mersinger and Caroline Pham expressed their dissent regarding the decision to initiate a new review period on Friday. Mersinger believed that Kalshi had made sincere efforts to address the regulator’s concerns and further comment periods would only cause unnecessary delays in reaching a resolution.
Mersinger also stated that Kalshi’s self-certified contracts do not meet the CFTC’s definition of “gaming.”
Mersinger suggested that the Commission should handle Kalshi’s certification like any other new product certification and follow the process outlined by Congress. This process involves conducting a public rulemaking process to establish a legal framework for determining whether event contracts, including those related to political control, should be prohibited from trading if they are deemed against the public interest.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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