Reaching a decision
Members of the US Commodity Futures Trading Commission (CFTC) are reportedly ready to oppose a request from political market provider Kalshi to offer political betting markets.
Americans can already access markets on inflation numbers, natural disasters, gas prices, and more.
As reported by Bloomberg, the decision comes after Kalshi and other influential people in Washington began lobbying for the opportunity to wager on political elections, such as those for the Senate and presidency. Americans can already access markets on inflation numbers, natural disasters, gas prices, and more.
The CFTC announced in August that it would have a 30-day comment period on the application. Kalshi attempted to drum up support by offering a $100,000 prize to anyone who could correctly pick the 435 House and 35 Senate race results.
Trouble in political betting markets
While the CFTC’s decision over Kalshi’s request is the latest in the developing political market battle, its feud with another site, PredictIt, has been topping headlines for a couple of months.
In August, the CFTC pulled PredictIt’s 2014 no-action letter, which mandated that the site remain non-profit and small-scale. The CFTC found that the site, created by the Victoria University of Wellington, New Zealand, had not followed the guidelines.
No new markets have been offered since the letter was pulled.
The CFTC ultimately mandated that the company get rid of its political markets by February 15, 2023. No new markets have been offered since the letter was pulled.
The battle is far from over, though. Several professionals, including college professors and industry members, banded with PredictIt to file a lawsuit in a district court in Texas. Their goal is to overturn the pulling of the no-action letter and allow PredictIt to continue offering political markets.
The CFTC responded by taking action on two fronts. First, it requested a change in the jurisdiction to the nation’s capital, where the division is located, and second, it filed a motion to dismiss the suit entirely in Texas. It pointed out that the lawsuit is incomplete because the beneficiary is Victoria University, which is not labeled as a part of the suit.
Kalshi throws PredictIt under the bus
While unintended, Kalshi may have forced the CFTC into action in removing PredictIt’s no-action letter.
Kalshi cited data from an “unregistered” operator with 29 million contracts during the 2020 election cycle in its letter sent to the CFTC asking for political betting. The unnamed operator was PredictIt.
theorized that the move was done on purpose to rid PredictIt (and competition) from the market
Parties invested in the political gambling scene have theorized that the move was done on purpose to rid PredictIt (and competition) from the market.
Pratik Chougule, a trader and analyst for the Star Spangled Gamblers, detailed the pothole that Kalshi put PredictIt in.
“One of the consequences of @Kalshi’s legal and regulatory strategy is that they, in effect, forced @CFTC’s hand in terms of @PredictIt’s no-action letter,” he said. “What serious university with a good reputation now in this legal minefield is going to put their brand on the line to do this?”
The CFTC is still yet to make an official decision on Kalshi’s request for political betting on election cycles. Kalshi is prepared to challenge the ruling if it does not go in its favor.