CFTC Withdraws Appeal in Kalshi Election Wagering Case

The U.S. Commodity Futures Trading Commission has decided to withdraw its appeal in the case involving Kalshi, a prediction market based in New York. This development, disclosed in a court filing on Monday, allows Kalshi to proceed with offering contracts related to political events.

According to the terms of the motion for voluntary dismissal, pending judicial approval, both parties agree to bear their own legal expenses, and Kalshi relinquishes any right to pursue litigation against the CFTC regarding this case.

“This is an important day for us. We’ve always been firm in our belief that adhering to proper procedures, regardless of the challenges, ultimately leads to success. Today’s outcome validates that approach,” remarked Kalshi’s CEO, Tarek Mansour. He emphasized that this marks a milestone for the future of prediction markets in the United States.

The conflict between Kalshi and the CFTC began in 2023 when the regulatory body rejected Kalshi’s proposal to allow users to wager on which political party would dominate Congress. At the time, the CFTC, led by former Chair Rostin Behnam, argued that such contracts represented illegal gambling and were not in the public’s best interest.

In response, Kalshi initiated a lawsuit against the CFTC in November 2023, contending that the agency had overstepped its bounds by blocking these contracts. The court ruled in Kalshi’s favor in September 2024, enabling the platform to offer the political contracts it had sought.

Following the loss, the CFTC quickly attempted to counter the district judge’s ruling. It requested a 14-day delay to stop Kalshi from listing the contracts while it prepared to appeal, but that request was denied. Subsequently, the CFTC lodged an appeal, restating several arguments made previously.

However, shortly after the oral arguments in early January, a significant shift occurred with the return of U.S. President Donald Trump to office. Additionally, his son, Don Jr., became a strategic advisor for Kalshi on January 13. Rob Schwartz, who served as general counsel for the CFTC at the time of the appeal, departed the agency in April after stepping back from the case in March.

Under the current acting Chair, Caroline Pham, the CFTC has adjusted its stance on cryptocurrency, retracting multiple crypto-related guidelines and streamlining its previously broad array of enforcement initiatives to focus on just two. This change aims to simplify the regulatory landscape for the cryptocurrency sector.