For more than a year, Better Markets has closely watched KalshiEX, LLC’s (‘Kalshi’) attempt to get the CFTC to allow traders to bet on U.S. elections via so-called “event contracts.” Based on the law, public policy, and the facts, the CFTC rejected this request and protected democracy, markets, and investors. Kalshi then filed a lawsuit against the CFTC and the case is currently playing out in the courts. Better Markets has made several key points about Kalshi’s dangerous proposal and lawsuit.
- The law expressly prohibits ‘gaming’ contracts like the one proposed and, therefore, the CFTC should reject Kalshi’s request. The law also requires the CFTC to reject contracts that are illegal under state law and more than a dozen states protect the integrity of elections by outlawing gambling on elections.
- Democracy and elections are foundational principles for the country and are not appropriate subjects for gambling and betting. Just as we would not allow traders to place bets on when or where they believe the next school shooting will occur, so too must we protect our elections by refusing to allow gambling on our democratic process. Also, gambling on elections would be susceptible to manipulation and could incentivize people to engage in improper if not illegal conduct that could raise concerns about the integrity of the electoral process.
- The proposed contract is also another example in the deeply troubling trend toward the ‘gamification’ and ‘retailization’ of finance. In this increasingly common pattern, everyday investors are lured into new financial products and services, justified by claims that the offerings represent beneficial ‘democratization’ and ‘innovation.
Key Better Markets Materials
- Op-ed in Los Angeles Times: Why the Push to Legalize Gambling on Elections is so Dangerous (May 28, 2024)
- Statement: We applauded the CFTC for taking steps today to clarify and strengthen the rules governing event contracts and specifically election gambling contracts (May 10, 2024)
- Substack: We Can’t Afford to Gamble on the 2024 Election (April 10, 2024)
- Frequently Asked Questions: Kalshi’s Attempt to get the CFTC to Unleash Gambling on U.S. Elections via Prediction Markets (March 14, 2024)
- Amicus Brief in KalshiEx LLC v. CFTC (March 4, 2024)
- Statement on Kalshi Lawsuit Against the CFTC’s Ruling (November 1, 2023)
- Statement on CFTC’s Decision to Reject Kalshi’s Proposal (September 22, 2023)
- In a NY Times Article on Kalshi’s proposal, Dennis Kelleher argued “the last thing democracy can withstand now is additional activities that erode the confidence of Americans.” (August 24, 2023)
- Op-ed in the Hill: The stakes are far too high to allow gambling on U.S. elections (July 25, 2023)
- Joint Letter Led by Better Markets Opposing Kalshi’s Proposal (July 24, 2023)
- Comment Letter to the CFTC on Kalshi’s attempt at self certification (July 24, 2023)
- Statement on Kalshi’s attempt to self-certify its own gambling event contracts with the CFTC (June 26, 2023)
- Letter to CFTC with Concerns about Kalshi’s proposal and an upcoming open meeting (June 23, 2023)
- Better Markets Filed a Complaint with the CFTC To Investigate CFTC Commissioner Pham’s Apparent Disclosure Of Highly Confidential Agency Information Involving Kalshi’s Application (December 9, 2022)
- Better Markets initial comment letter to the CFTC on Kalshi’s proposal (September 26, 2022)