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Analysis

December 22, 2023

Kalshi’s Dangerous Efforts to Allow Gambling on U.S. Elections

For the last year, Better Markets has closely watched KalshiEX, LLC (‘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. Better Markets has made several key points about Kalshi’s dangerous proposal.

  • 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.

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