WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the decision of the D.C. Circuit to remove an administrative stay in KalshiEx LLC v. CFTC, thereby allowing betting on the congressional elections to move forward while it takes time to consider the appeal.
“The court’s order will allow betting on an incredibly close and contentious race just weeks before the election. That makes this a sad and ominous day for election integrity in the United States.
“The Court concluded that the CFTC had failed to show that the agency or the public would be irreparably harmed if trading went ahead while the appeal is heard. Yet, the Court conceded the various threats of election and market manipulation posed by the contract. Moreover, it acknowledged that the merits were ‘close and difficult,’ suggesting the CFTC has a decent chance of winning ultimately. The record clearly includes concrete examples of election interference, which substantiates the threat of irreparable harm. Under these circumstances, and with so much at stake, the Court could have and should have gone the other way.
“In our brief in this case, we wholeheartedly supported the CFTC’s decision on both legal and policy grounds. As we explained, 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.
“Gambling on elections will 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.
“The point here is that there is no way to undo the potential damage to the public interest of allowing bets in the final weeks of an election year. The Court at least recognized the possibility that new evidence of election interference and market manipulation could emerge as Election Day approaches. And it made clear that CFTC may renew its request for a stay if it produces such ‘cognizable harms’ going forward. But no matter what, we have yet another reason to be concerned about the upcoming elections.”
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