US CFTC seeks quick appeals hearing on elections betting after earlier loss

By Laura Matthews

WASHINGTON (Reuters) – The U.S. Commodity Futures Trading Commission has asked a federal appeals court to expedite a hearing in a case that would determine if Americans can legally use derivatives contracts to bet on the outcomes of U.S. elections.

The filing on Wednesday evening came after the U.S. appeals court earlier that day blocked the CFTC’s effort to prohibit derivatives trading platform KalshiEX LLC from listing elections contracts, pending an appeal. A lower court had previously allowed Americans to place those bets.

“The public’s interest lies with prompt disposition of this appeal,” the CFTC’s filing with the Court of Appeals for the D.C. Circuit read.

The agency argued that election contracts are susceptible to market manipulation, and that the contracts could create the perception that the integrity of elections is at risk.

“[This] would put the CFTC in the position of investigating such activities in election markets, well outside of its traditional areas of responsibility,” it said.

The agency has asked the court for oral arguments in early December and noted that Kalshi has previously indicated it will oppose the effort to fast-track the appeal.

In dismissing an earlier motion by the CFTC to pause the D.C. District Court’s order allowing Kalshi to list and trade election contracts, the appeals court said the regulator failed to show how the agency or the public interest would be harmed by Kalshi’s “event” contracts, as it had argued.

That ruling meant that Kalshi – at least for the time being – can offer trading in such contracts, potentially paving the way for other firms to offer such derivatives in the future. The U.S. elections will be held on Nov. 5.

“The [CFTC] has given this court no concrete basis to conclude that event contracts would likely be a vehicle” for distorting the electoral process, the Circuit court wrote on Wednesday.