WASHINGTON, D.C.— Dennis Kelleher, Co-founder, President, and CEO, issued the following statement in connection with Better Markets’ response to KalshiEx, LLC’s (Kalshi) failed rebuttal of Better Markets’ comment letter previously filed with the Commodities Futures Trading Commission (“CFTC”) opposing Kalshi’s election gambling proposal (Proposal).
“Kalshi is asking the CFTC to approve its dangerous unlawful sneaky backdoor attempt to unleash gambling on U.S. elections. However, Kalshi’s own recent filing with the CFTC provides compelling proof that its Proposal to allow bets of up to $100 million for some traders on U.S. elections will endanger democracy and result in election interference and insider trading.
“Kalshi’s filing touts Sean McElwee, a notorious election gambler and disgraced political consultant, as a ‘progressive’ supporters of Kalshi’s Proposal. However, Kalshi did not disclose that McElwee, while leading a Democratic polling and consulting company, reportedly bet against the same campaigns he was working on and encouraged his staff to do the same. McElwee reportedly admitted that he placed these bets based on inside information. Given that he also worked with and advised the known crypto criminal and election law violator Sam Bankman-Fried on his political donations, one has to wonder if dark money and other wrongful, illegal if not criminal conduct was involved as well.
“Moreover, it is likely that Kalshi supporter McElwee’s betting was substantially less than the $100 million per trade cap Kalshi is proposing yet McElwee still engaged in election-related misconduct. With bets of up to $100 million per trader, there will almost certainly be billions if not tens of billions of dollars ultimately at stake on a wide range of elections if Kalshi’s Proposal is approved. That will present very powerful incentives that many people will not be able to resist to engage in nefarious activities that will put their bets in the money via inappropriate if not illegal election-related conduct. Given that Kalshi and its many Wall Street and Silicon Valley backers will seek to maximize profits by maximizing trading, the use of predatory gamified apps designed to induce as much trading in as big amounts as possible is inevitable. That will just further inflame an environment where elections are viewed as mere opportunities to cash in with little if any regard for the consequences to elections and democracy.
“While these reasons alone provide ample grounds for the CFTC to reject Kalshi’s Proposal, there are also multiple, independent additional grounds for the CFTC to reject Kalshi’s Proposal, as detailed in Better Markets previously filed comment letter.”
Our full response is available here.
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.