WASHINGTON, D.C.— Cantrell Dumas, Director of Derivatives Policy, issued the following statement in connection with recently released opinion in KalshiEx LLC v. CFTC and a hearing today that allowed Kalshi to move forward with offering political event contracts:
“Allowing Kalshi’s political event contracts is a dangerous move that opens the floodgates to unprecedented gambling on U.S. elections, eroding public trust in both markets and democracy. The court’s narrow interpretation of ‘gaming’—limiting it to games for stakes rather than encompassing the broader risks of gambling—ignores the spirit of the Commodity Exchange Act and the very real threats of market manipulation and election interference. This ruling prioritizes corporate profit over public interest.
“The court’s misreading of the law draws an unnecessary distinction between the underlying event and the contract itself. In rejecting the CFTC’s argument that the act of trading could equate to gaming or other unlawful activities, the court overlooked the broader legislative intent expressed by members of the Senate Agriculture Committee during the passage of the Dodd-Frank Act. They highlighted the need to prevent speculative behavior that could destabilize financial markets. While no explicit prohibition on gambling was added, the concerns raised in these discussions—especially in the wake of the 2008 financial crisis—reflect Congress’ intent to curb gambling-like speculation in the derivatives markets. By ignoring this context, the court missed an opportunity to safeguard both financial markets and democratic processes from undue speculative risk.”
“This unfortunate decision highlights the harmful effects of the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, which eliminated the decades-old requirement that courts must defer to agencies’ own interpretations of their own statutes, so long as they are reasonable. Had that requirement been in place here, perhaps the CFTC would still be empowered to protect the public from dangerous contracts like Kalshi’s. Moreover, although the Supreme Court in Loper Bright specifically allowed courts to still weigh the technical expertise and experience of agencies in interpreting a statute, the judge explicitly refused to do so here, further compounding the harmful impact of the Loper Bright decision.
“Better Markets stands ready to continue advocating for the CFTC’s role in protecting both our financial markets and democratic institutions from harmful speculation.”
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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 www.bettermarkets.org.
