WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement on today’s decision by the Commodity Futures Trading Commission (CFTC) to abandon its appeal in KalshiEx LLC v. CFTC:
“The CFTC has just voluntarily surrendered its fight to overturn a dangerous lower court decision that allows gambling on the outcome of congressional elections. That decision was bad law and even worse policy, as it threatens the integrity of our federal elections, promises a new wave of market manipulation and investor losses, and casts the CFTC in the role of election supervisor, something the small agency lacks the resources or expertise to do. Moreover, with this dismissal, the lower court decision will remain intact, setting a terrible and enduring legal precedent. This about-face, without any hint of a justification and after the case was fully briefed and argued by both sides, is an ominous setback for all Americans.
“What led to this lawsuit were ‘event’ contracts offered by Kalshi that allowed wagers of up to $100 million on the outcome of congressional elections. Following a thorough and thoughtful analysis, the CFTC rightly banned them in 2023, concluding they were contrary to the public interest. But Kalshi challenged the CFTC’s decision in federal district court and prevailed. As feared, Kalshi then rushed to create dozens of new contracts keyed to a wide variety of election contests, including senate races, the presidential race, and even the margin of victory in pivotal states. The CFTC appealed the district court’s error-laden decision to the D.C. Circuit.
“As we explained in our amicus brief supporting the CFTC, Kalshi’s contracts pose numerous threats. They undermine the integrity of our elections by incentivizing misinformation and other forms of election manipulation for profit. The number of investor victims is bound to grow exponentially, since any new gambling craze today is turbo-charged by AI and slick ads. Moreover, the CFTC is underfunded, under-staffed, and ill-equipped to police elections. Its focus should be on making sure the commodity markets work as intended so that Americans can pay stable prices for the commodities and goods they rely on in their everyday lives, from gas to groceries. To top it off, there was nothing to justify these threats since these election gambling contracts serve no legitimate financial purpose, such as hedging risk.
“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.”
You can find our amicus brief here and our fact sheet on the case here.
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