Better Markets filed a comment letter with the Commodities Futures Trading Commission (“CFTC”) regarding a request for approval of a proposed “political event contract,” which would allow traders to speculate on the future partisan control of Congress.
Why It Matters. KalshiEX, LLC (‘Kalshi’), a Designated Contract Market, has asked the CFTC to allow traders to gamble up to $25,000 on the outcome of congressional elections through a new political event contract relating to the partisan control of Congress. If approved, Kalshi’s contract would enable widespread gambling among retail traders in what has historically been a derivatives market reserved primarily for commercial enterprises that need to hedge against price fluctuations in the commodities they use and produce. This gross commercialization and commodification of our democratic process —unprecedented in the country’s history — would defy the historical underpinnings of the futures markets, endanger retail traders, and undermine public faith in our elections.
What We Said. Based on the law, public policy, and the facts, the CFTC should reject this request and protect democracy, markets, and investors. 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. The proposal should also be rejected as against public policy. Democracy and elections are foundational principles for the country and are not appropriate subjects for gambling and betting. Moreover, 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. Finally, in addition to violating the law and being contrary to public policy, Kalshi’s submission includes grossly deficient information and data about its proposed contract, making it impossible for the CFTC or the public to fully understand, evaluate, or comment on the submission within the proposed timeline.
Bottom Line. For the sake of our markets, investors, and our democracy, Better Markets urges the CFTC to reject Kalshi’s unprecedented proposal.
Read our full Comment Letter here or click the button below.