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March 4, 2024

Court Should Affirm CFTC’s Decision to Prohibit Gambling on Elections

WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the filing of an amicus or “friend of the court” brief in KalshiEx LLC v. CFTC, a case that will determine whether gambling on U.S. congressional elections will be allowed:

“The attempt in this case to override the CFTC and allow widespread gambling on the outcome of our congressional elections violates the law and conflicts with the public interest.  The stakes are huge, since this latest contrived financial product would undermine the integrity of our elections, trigger market manipulation, and victimize countless investors with the help of AI and digital engagement practices. Especially in these pivotal yet fragile political times, the last thing our country needs is for democracy to be undermined further by allowing gambling on elections.

“Last September, the CFTC issued a well-reasoned order that denied Kalshi’s petition to offer these contracts for public trading.  In keeping with today’s typical response when the financial industry doesn’t get what it wants from an agency, Kashi filed suit in federal court. In our brief, we wholeheartedly support the CFTC’s decision on both legal and policy grounds.  As explained in our brief, Congress specifically foresaw the dangers posed by event contracts, and it authorized the CFTC to prohibit those that pose the greatest threats.  Among them are contracts that involve gaming or activity that is unlawful under state law, and Kalshi’s election gambling contract (EGC) falls into both categories.

“We also highlight the multiple harms these contracts would inflict, first and foremost by undermining the integrity of our elections.  The election process in this country is already under assault, and a financial product that invites election interference will further compromise the electoral process and further erode the public’s already shaken confidence in our nation’s most important democratic institution.  Gambling on elections would create powerful new incentives for bad actors to interfere with our elections and sway voters outside of the democratic process. The use of AI, ‘deepfakes’ and social media to manipulate voters and influence election outcomes has already become all too real.  Ready access to an election gambling contract such as Kalshi’s will intensify that danger with the promise of quick profits.

“That’s just the beginning.  The EGC marketplace would also invite market manipulation, which would be widespread and difficult to police.  And EGCs would victimize countless investors through predatory behavior.  That harm would inevitably be magnified through the use of novel technologies being deployed in today’s financial markets, including predictive data analytics and gamification strategies that will manipulate investors and lure them to this new form of gambling.  The fact is that the derivatives markets were never intended to serve primarily as casinos or arenas for sheer speculation. They were established to provide risk hedging and price discovery tools that real businesses need.  But as the CFTC correctly concluded, Kalshi’s contract cannot consistently and reliably serve those purposes.

“If the Court sides with Kalshi, Pandora’s box will be opened, and the public interest will suffer.  The threat goes beyond this contract, since approval of the EGCs would narrow the CFTC’s authority, hamper its ability to reject these products, and open the door to a wave of equally harmful variants, as the financial industry races to capitalize on the next financially engineered tool for extracting wealth from everyday American investors.”


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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