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September 21, 2023

The CFTC’s Imminent Decision on Kalshi’s Election Proposal will Either Protect Markets and Democracy or Allow Gambling on U.S. Elections

To:       Interested Parties
From:  Dennis Kelleher, President and CEO (Media Contact: Madeline Tucker, Press Secretary,
Date:   September 21, 2023
Re:       The CFTC’s Imminent Decision to Either Protect Markets, Investors, and Democracy or Allow Gambling on United States Elections by Granting Kalshi’s Proposal

Over the last year, Better Markets has closely watched KalshiEx, LLC’s (‘Kalshi’) questionable attempts to get the CFTC to allow traders to place bets on U.S. elections via so-called “event contracts” with individual bets of up to $100 million and total betting likely running into the billions of dollars. Unfortunately, misconduct if not violations of law have accompanied those attempts. The deadline for the CFTC to make a decision on this request is imminent. Better Markets, along with allied organizations and experts, Congressional Representatives, and United States Senators, is urging the CFTC to protect democracy, markets, and investors by rejecting Kalshi’s request.

The law expressly prohibits gaming contracts like the one Kalshi has proposed. The CFTC is also required by law to reject contracts that are illegal under state law, and more than a dozen states prohibit gambling on elections.

Additionally, democracy and elections are foundational principles for the country and are not appropriate subjects for gambling and betting. Gambling on elections would be susceptible to manipulation and could incentivize people to engage in improper if not illegal conduct that could raise concerns about the integrity of the electoral process.

The proposed contract is also another example in the deeply troubling trend toward the “gamification” and ”retailization” of finance. In this increasingly common pattern, everyday investors are lured into new financial products and services, justified by baseless if not false claims that the offerings represent beneficial “democratization” and “innovation.”

The CFTC’s mandate is to protect markets and investors from violations of the Commodity Exchange Act and excessive speculation, both of which Kalshi would violate.  Moreover, the CFTC has nothing to do with elections, and this is a sneaky, backdoor attempt by Kalshi to unleash gambling on U.S. elections. For many reasons of law and policy, we urge the CFTC to soundly reject this proposal.

Additional Information and Resources on Kalshi’s Proposal with the CFTC:

Op-ed in MSNBC by Senator Jeff Merkley: Legalizing election gambling is a bad bet for democracy (September 19, 2023)

New York Times Article: Proposal to Expand Political Betting Could Up the Ante on Control of Congress (August 24, 2023)

Senators’ Letter to the CFTC opposing Kalshi’s Proposal (August 2, 2023)

Op-ed in the Hill by Dennis Kelleher: The stakes are far too high to allow gambling on U.S. elections (July 25, 2023)

Joint Letter Led by Better Markets Opposing Kalshi’s Proposal (July 24, 2023)

Congressmen Sarbanes and Raskins’ letter to the CFTC opposing Kalshi’s Proposal (July 24, 2023)

Better Markets’ Comment Letter to the CFTC on Kalshi’s attempt at self certification (July 24, 2023)

Better Markets’ Statement on Kalshi’s attempt to self-certify its own gambling event contracts with the CFTC (June 26, 2023)

Better Markets’ Letter to CFTC with Concerns about Kalshi’s proposal and an upcoming open meeting (June 23, 2023)

Better Markets’ Complaint Filed with the CFTC to Investigate CFTC Commissioner Pham’s Apparent Disclosure of Highly Confidential Agency Information Involving Kalshi’s Application (December 9, 2022)

Better Markets’ initial comment letter to the CFTC on Kalshi’s proposal (September 26, 2022)




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