The world of political betting is about to get a whole lot more interesting. A federal judge has greenlit a prediction-market startup called Kalshi to offer contracts for betting on the outcome of congressional elections. This landmark ruling, reported by the Wall Street Journal, marks the first time in over a century that Americans will be able to legally wager on U.S. elections.
The decision by U.S. District Judge Jia Cobb overturns a 2023 Commodity Futures Trading Commission (CFTC) ruling that had blocked Kalshi from offering these contracts. Judge Cobb, appointed by President Joe Biden, ruled in favor of Kalshi, stating that the CFTC had exceeded its authority in preventing the contracts.
Kalshi, founded by Luana Lopes Lara and Tarek Mansour, plans to launch its congressional control contracts for trading as early as next week. They intend to quickly introduce additional contracts for other political events, further expanding the scope of legal election betting.
The CFTC, which regulates financial markets, had previously argued that political-event contracts constituted gambling and were thus illegal under federal law. They also expressed concerns that allowing such contracts could lead to manipulation and complicated investigations.
While many states, including Nevada, prohibit election betting, some countries like the U.K. allow it. Supporters of election betting, including Kalshi, argue that their contracts provide a safer alternative to foreign betting platforms and offer valuable data for political analysis.
This legal development comes as Polymarket, a crypto-based prediction market, has witnessed a surge in trading volume on the upcoming presidential election. Despite being unavailable to U.S. users since a 2021 settlement with the CFTC, Polymarket has seen hundreds of millions of dollars wagered on the race between former President Donald Trump and Vice President Kamala Harris.
With the court’s decision, Kalshi aims to capitalize on this growing market and compete with offshore competitors by introducing its own election contracts. This decision opens up a new chapter in the relationship between politics, finance, and prediction markets, potentially altering the way we engage with and analyze elections.
