Kalshi's Proposal for Congress Control Betting Denied by CFTC
The Commodity Futures Trading Commission (CFTC) has rejected the proposal from Kalshi, a prediction market platform, to allow users to place bets on which party would gain control of the chambers of Congress. The regulatory body deemed these contracts as engaging in unlawful gambling activities and contrary to the public interest. KalshiEx LLC had submitted this proposal in June 2023.
The proposed contracts were designed to be settled in cash and would have enabled users to wager on yes or no questions regarding the potential control of the House and Senate by either the Republicans or Democrats in a given term.
In a similar case last year, an appeals court ruled in favor of another prediction market, PredictIt, allowing it to continue operations until a final court decision, despite a prior order from the CFTC to cease operations.
Tarek Mansour, the Chief Executive Officer of Kalshi, expressed fundamental disagreement with the CFTC's decision. Nevertheless, he remains optimistic that the company's vision will eventually gain recognition and acceptance, emphasizing that innovative concepts often require time for comprehension and adoption. Mansour pointed out other financial innovations, such as exchange-traded funds, grain futures, and insurance, which initially faced skepticism.
Dennis Kelleher, the CEO of Better Markets, a consumer advocacy organization, supported the CFTC's decision, deeming it well-grounded and thoughtful. Kelleher raised concerns about potential risks to election integrity and alleged violations of the Commodities Exchange Act within Kalshi's proposal. He emphasized that these markets are not intended to function as venues for speculative and high-risk bets, highlighting that legal restrictions are in place to govern speculation and gambling activities within these markets.
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