The U.S. Commodity Futures Trading Commission (CFTC) has filed a last-minute emergency application to stop the U.S.-based prediction market, Kalshi. This emergency motion was made within a day of a judicial ruling that had an earlier CFTC order that was stopping Kalshi’s election-linked trading.
CFTC's Emergency Motion Explained
On September 6, the CFTC filed an ‘emergency stay’ to halt the implementation of the court’s decision that permitted Kalshi to list its election contracts for trading. In response, the regulator said that it required more time to study the court’s rationale before deciding on an appeal.
They rely on the judgment of the court while the CFTC has stated that they have not been able to make the necessary decision on whether or not they want to appeal with the particular inclination in the absence of a most adequate elaboration from the court. For that reason, according to the agency, it would be difficult to further assemble a proper basis for an appeal.
The CFTC said, “This court finds that the time is of the essence in the issuance of stay”, and noted that Kalshi may immediately go live with issuance of its election betting contracts. Kalshi had already prepared a message to their customers posted on their homepage of the new service that read: “Election Markets are Coming to Kalshi!”
Legal Context: A meeting has also made a preliminary in the ASN v/s Kalshi case
The emergency filing came after a verdict by Judge Jia Cobb of the U. S. District Court for the District of Columbia in favor of Kalshi. The order means that the prediction market can enter into betting contracts on when Barack Obama or the Republican candidate Mitt Romney will triumph in the U. S. poll due on November 4.
This seems to be the experts’ view of the matter; evidently, this is a big victory for Kalshi. Following the ruling, Variant Fund’s Chief Legal Officer, Jake Chervinsky took to his Twitter account on September 7 and express his joy. He described the decision as a ‘HUGE win’ but at the same time said this should be taken with caution until a full analysis of the court’s opinion has been made.
Chervinsky further explained that such a decision means that it is possible to fight the intimidation from regulatory agencies through the courtroom. He said, “The problem with too much regulation is – FILE MORE LAWSUITS. ”
This is the basic argument by CFTC against the contracts by Kalshi The crux of it is that CFTC was vested with the It’s basic argument to Kalshi’s contracts is as follows:
The CFTC first filed the order in September 2023 claiming that Kalshi’s election contracts meet the definition of “gaming and activity that is unlawful under state law. ” The commission also stated that Such contracts are “not in the public interest.
However, the recent court decision enabled Kalshi to list its contracts, which resulted in the CFTC filing an emergency motion to restrain immediate trading until the investigation was conducted.
What is the Future of Kalshi and CFTC?
Over time, the CFTC wants a temporary suspension of 14 days to postpone Kalshi’s election betting markets. This will help the agency to gain more time and deliberate on the decision made by the court and whether to appeal the decision or not. As for Kalshi, though, this decision brings new prospects to the platform, unless there are further legal and regulatory steps taken against it.
