The Commodity Futures Trading Commission (CFTC) recently banned political events from being listed or available for clearing or trade on Kalshi’s regulated event exchange. Commissioners said Kalshi’s proposal for listing cash-settled political event contracts crosses the line into unlawful gambling.
In a statement, CFTC Chair Rostin Behnam said, “It makes sense for the CFTC to have authority to combat fraud, manipulation and false reporting in underlying commodity markets. But it is impractical for the CFTC to combat them in the underlying market here, a political contest. The implications of such authority are vast and could extend in a multitude of directions beyond the election itself, political fundraising and polling, to name just two.” Benham added the commission would have to become more than an “election cop” if it approved Kalshi’s proposal.
The CFTC’s move carried the weight of U.S. Senators Elizabeth Warren and Diane Feinstein and other lawmakers who publicly opposed Kalshi’s proposed political markets. In a statement, the Senators said, “The CFTC has never allowed a for-profit venture to operate a political event contract, nor has the agency permitted any entity to operate a political event contract of such scale.
“Establishing a large-scale, for-profit political event betting market in the United States by approving Kalshi’s requested contracts would profoundly undermine the sanctity and democratic value of elections. Introducing financial incentives into the elections process fundamentally changes the motivations behind each vote, potentially replacing political convictions with financial calculations.”
In response, Kalshi Chief Executive Officer and Co-founder Tarek Mansour posted a long thread on X, formerly Twitter.
He wrote, “The CFTC has rejected Kalshi’s proposal to list election markets. We fundamentally disagree. The decision is arbitrary and capricious. We know that what Kalshi has embarked on is bold and we have faith in the market.”
Mansour said many modern financial products, such as ETFs, insurance and grain futures, also overcame opposition. He wrote, “Our mission is bold. Bold missions are hard. This is not the first time the Kalshi team gets a ‘NO’ and it’s probably not the last time. We have pushed through all the previous NOs and we will push through this one.” He said Kalshi is considering its options, but meanwhile, “There will be no election markets on Kalshi.”
He directed people who want to trade election markets to PredictIt, which has had its own legal challenges, with a case currently pending in District Court.
