CFTC seeks to settle with Kalshi
The Commission has sought settlement approval from the US District Court.
Key points:
– The CFTC has requested permission from the US Court of Appeals to settle with Kalshi
– If granted, this move would likely see the operator allowed to continue in its provision of election betting markets in the US
– The fate of sports events prediction markets within the context of this latest update remains unclear
The Commodity and Futures Trading Commission (CFTC) has requested permission from the US Court of Appeals for the District of Columbia Circuit to settle its ongoing high-profile legal dispute with prediction market operator Kalshi.
This major update comes as a blow to advocates opposing sports events prediction markets in the US, following weeks of legal contention. Indeed, prediction market operator Kalshi’s recent expansion into the provision of sports events markets has sparked controversy in the sports betting industry, as the operator is currently circumventing sports betting regulation and tax whilst still be able to offer what is – in the opinion of many – sports wagering.
Herein lies the brief context behind what has become one of the CFTC’s most high-profile legal cases in recent years, with state regulators, sports betting operators and sports leagues – such as the NBA – hanging on the legal direction of the CFTC. For now, the CFTC is seen to be settling with Kalshi on at least election prediction markets, for certain – leaving the fate of sports events prediction markets hanging in the balance.
Last week, NBA Chair Caroline D. Pham reached out to the CFTC to outline a plethora of game integrity related concerns pertaining to sports events prediction markets. Elsewhere, the Michigan Gaming Control Board also directly addressed the CFTC to raise concerns.
The past two months have seen lawsuits ignite across the US in the form of cease-and-desist letters from state regulators against Kalshi related to sports events contracts, with Kalshi succeeding in securing preliminary injunctions in some instances. One of these instances was in New Jersey, where District Court Judge Kiel ruled that responsibility for the matter lay solely with the CFTC, rather than any state regulator.
Good to know: Amid this flurry of legal action, Kalshi appointed former AGA SVP and PASPA pioneer Sara Slane as its Head of Business Development
Following the rapid proliferation of the opposition of sports events prediction markets and Kalshi in general, the CFTC scheduled a roundtable for late April, which was subsequently cancelled at the last minute.
This, paired with the latest request for settlement, indicates that the CFTC could be looking to allow the controversial practice to continue – a move that could spell an explosion in popularity for sports events prediction markets, and one of the largest changes to the framework of the sports betting industry in recent times.
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