Kalshi Accused of Operating as Online Casino During Presidential Election, Says CFTC
The CFTC claims prediction platform Kalshi transformed into an "online casino" immediately after winning a court battle to offer U.S. presidential election trading.
In a recent court filing, the Commodities and Futures Trading Commission (CFTC) criticized Kalshi's conduct following the appeals court decision that allowed the company to offer election-related events contracts.
Professional couple posing in office
Kalshi, regulated by the CFTC as a derivatives platform, offers events contracts that let users speculate on various outcomes, including cryptocurrency prices and election results. The company's name means "everything" in Arabic.
The controversy began in October 2022 when the CFTC ordered Kalshi to stop offering election-related contracts, citing U.S. laws against political betting. Kalshi responded with a lawsuit, arguing the CFTC had exceeded its authority. While a lower court initially sided with Kalshi in September, the CFTC appealed the decision.
According to the CFTC's filing, once restrictions were lifted, Kalshi immediately displayed a large billboard on the Las Vegas Strip promoting "LIVE odds" and encouraging people to "Bet the election." The company also introduced "Parlay Contracts" and celebrated surpassing FanDuel in App Store rankings.
The CFTC argues this behavior contradicts Kalshi's earlier claims that its election markets were designed to provide valuable political insights and help traders hedge against political economic risks. The platform ultimately facilitated $132 million in election-related trades.
The regulator is now requesting the appeals court to reverse the lower court's ruling that Kalshi's congressional control contracts are legal and do not constitute gaming activity.
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