Judge Calls CFTC Out for Exceeding Authority in Kalshi Case, Prediction Market Launches Election Contracts and Takes Them Down

The CFTC’s actions have been called out by a federal judge for going beyond its regulatory authority.

As the Commodities Futures Trading Commission (CFTC) tries to put a spoke in Kalshi’s wheel, attempting to keep the platform from debuting election contracts, Federal Judge Julia Cobb called the CFTC out. “The CFTC’s order exceeded its statutory authority. Kalshi’s contracts do not involve unlawful activity or gaming,” she said in a court filing on September 12. “They involve elections, which are neither.”

The CFTC issued an order last year to stop Kalshi from bringing elections-based prediction contracts as it feels that the contracts can ruin election integrity. The prediction market filed suit against the agency, and here we are. “This case is not about whether the Court likes Kalshi’s product or thinks trading it is a good idea. The Court’s only task is to determine what Congress did, not what it could do or should do. And Congress did not authorize the CFTC to conduct the public interest review it conducted here,” the Judge added.

Kalshi Debuts Election Contracts, Only to Take Them Down

While no official statements about the election contracts going live have come from Kalshi’s side, the firm’s X account left a cryptic post two days before the court filing. “who else couldn’t sleep in anticipation of election markets going live,” it read. Kalshi published another cryptic post on the day of the court filing.

Hours later, the first election contract, called ‘Which party will win the Senate?’, went up on the prediction market. Other contracts went up as well. However, Kalshi’s website now reads, “Trading is paused on elections.kalshi.com pending court process.” It looks like the Court granted the CFTC an administrative stay, which is not a full stay. However, it could get back on the matter on Monday to lift the stay.