In a groundbreaking ruling, a federal judge has decided to allow Americans to use financial market instruments to wager on the results of U.S. elections. The judge found that the regulatory agency that had previously blocked election betting had exceeded its authority.
The case, which involved predictions marketplace KalshiEX LLC and the Commodity Futures Trading Commission (CFTC), was resolved by District Court Judge Jia Cobb. In her memorandum and opinion issued on Sept. 12, Judge Cobb paved the way for the use of derivatives contracts for election betting.
The ruling was a setback for the CFTC, which had prevented Kalshi from offering political event contracts due to concerns about illegal gaming and activities not in the public interest. Although the judge acknowledged the CFTC’s concerns about the potential threat to the public interest posed by allowing election betting, she concluded that the agency had overstepped its statutory authority.
Judge Cobb emphasized that Kalshi’s contracts were not unlawful and did not involve gaming. She stated that the court’s role was to interpret what Congress had authorized, not what it could or should do. As a result, she ruled in favor of Kalshi, allowing them to continue offering election betting contracts.
Following the ruling, Kalshi’s betting website went live, enabling Americans to legally place bets on election outcomes in a regulated marketplace. The CFTC did not comment on the ruling, while Kalshi’s CEO celebrated the decision on social media and announced the launch of the election betting marketplace.
The rules for trading contracts on Kalshi’s election marketplace include prohibitions for certain individuals, such as members of Congress, candidates for public office, and campaign staffers. Despite the positive outcome for Kalshi, some critics, such as Cantrell Dumas from Better Markets, expressed concerns about the potential negative impact of political event contracts on the electoral process.
Overall, the judge’s ruling marks a significant development in the use of financial instruments for election betting, emphasizing the importance of adhering to statutory authority and protecting the public interest in such trading activities. Please provide an alternative version.
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