Kalshi Notches Legal Win as CFTC Retreats from Election Markets Case

Posted on: May 6, 2025, 02:28h. 

Last updated on: May 6, 2025, 02:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Massive win for prediction markets operator
  • Election markets brought Kalshi, others to prominence
  • CFTC filed to dismiss its appeal

Prediction markets operator Kalshi scored a significant legal victory Monday when the Commodities Futures Trading Commission (CFTC) voted to drop an appeal that sought to prohibit the derivatives exchange from offering event contracts linked to US elections.

Kalshi
A Kalshi advertisement. The CFTC is dropping an appeal, paving the way for Kalshi to offer election betting. (Image: Kalshi)

The case dates back to October 2022 when the CFTC ordered Kalshi to not feature event contracts linked to domestic elections because that form of wagering is prohibited in the US. The financial exchange company subsequently sued the regulator in 2023, arguing that the CFTC overstepped its authority and that the yes/no propositions it offers are not akin to traditional sports wagers.

That ruling touched off a spate of legal wrangling in advance of the 2024 presidential election — an event that brought election “betting” into the mainstream in the US while ushering prediction markets and their potential competitive threat to old guard sportsbooks to the forefront of the domestic sports betting conversation.

Election markets are here to stay,” Kalshi CEO Tarek Mansour said on LinkedIn. “Prediction markets have been banned, censored, limited, and pushed out for decades. This win solidifies their right to exist and thrive.”

A Monday filing with the U.S. Court of Appeals for the D.C. Circuit indicates the CFTC voted 3-0 with one abstention in favor of dropping its appeal.

Federal Regulatory Environment Moving in Kalshi’s Favor

While Kalshi is grappling with a spate of state-level legal challenges, the CFTC’s decision to drop the appeal could be a sign that the federal regulatory climate is moving in the company’s favor.

Founded in 2018 by Tarek Mansour and Luana Lopes Lara, Kalshi has taken steps to shore up its ranks in anticipation of federal legal fights and has benefited from some good luck along way, including news in February that former board member Brian Quintenz was nominated by President Trump to lead the CFTC.

The appointment of Quintenz to lead the CFTC arrived about a month after Kalshi named Donald Trump Jr. — the president’s eldest son — to an advisory role. Those steps may have benefit Kalshi in its quest to continue offering elections contracts, but critics believe the CFTC’s decision to drop the appeal is bad for Americans and could undermine election integrity.

“In a stark betrayal of the public interest, the CFTC has decided to give up the fight and turn its back on election integrity, the protection of countless investors, and the agency’s own ability to do the job Congress intended,” said Stephen Hall, legal director and securities specialist at Better Markets, in a statement.

Why It Matters for Kalshi

The ability of Kalshi, Polymarket, PredictIt, and other derivatives exchanges to offer elections-linked contracts to US bettors and traders is significant on multiple. First, that was a multi-billion enterprise during the 2024 presidential election cycle.

Second, this form of investing or wagering is garnering more attention ahead of the2026 midterm elections and that buzz could bring more clients into the fold for Kalshi and its rivals, serving as a springboard ahead of the 2028 presidential election.

Finally, the ability to offer election “bets” represents a significant advantage for prediction markets operators over sportsbooks because the latter are prohibited from featuring such wagers. That’s on top of prediction markets currently having the ability to operate in all 50 states — a luxury not afforded to gaming companies.