U.S. election bets/ legal election betting/ election betting suspension/ Kalshi betting/ CFTC election ruling/ Newslooks/ ATLANTIC CITY/ N.J./ A federal appeals court halted legal betting on U.S. Congressional elections just hours after it began. The decision came in response to a challenge from the Commodity Futures Trading Commission, which warned of the risks of election manipulation. The court’s temporary order leaves the fate of already placed bets uncertain.
U.S. Election Betting Suspension Quick Looks:
- Appeals Court Action: A federal appeals court issued an order suspending legal election betting shortly after it was approved.
- Initial Ruling: U.S. District Court Judge Jia Cobb had allowed New York-based Kalshi to offer bets on the upcoming U.S. elections.
- Commodity Futures Commission: The commission appealed the ruling, citing concerns about potential election manipulation.
- Betting Temporarily Suspended: Kalshi briefly accepted bets on Congressional control before the court’s decision froze further activity.
U.S. Election Betting Halted by Appeals Court Ruling
Deep Look:
On Thursday, September 13, 2024, legal betting on U.S. Congressional elections was abruptly suspended by a federal appeals court, mere hours after it had been allowed to begin. The Court of Appeals for the District of Columbia Circuit issued a late-night order to temporarily freeze the process, citing concerns that needed to be reviewed before proceeding further. No specific timeline was given for when the court will issue a final ruling on the matter.
The court’s action came quickly after U.S. District Court Judge Jia Cobb had cleared the way for New York startup company Kalshi to begin offering contracts—effectively bets—on the outcome of the upcoming U.S. elections. Kalshi’s markets focused on bets regarding which party would gain control of the U.S. House of Representatives and the Senate in November. Following Cobb’s decision, the company wasted no time in launching the markets, and by Thursday afternoon, it had begun accepting an undisclosed number of wagers on these elections.
The swift ruling by the appeals court, which occurred around 8:30 p.m. Thursday, temporarily paused further betting activities. As of Friday, it remained unclear what would happen to the bets already placed before the suspension took effect. Neither Kalshi nor the regulatory body involved—the Commodity Futures Trading Commission (CFTC)—had issued official statements in response to requests for comment on the situation by midday Friday.
The legal battle over election betting has centered on the CFTC’s concerns about potential risks to the electoral process. The commission, which oversees commodities markets and other financial instruments, had warned that allowing bets on elections could lead to efforts to manipulate the results for financial gain. The commission’s appeal followed Judge Cobb’s earlier decision, which had granted Kalshi permission to launch its betting platform on the condition that the markets would offer contracts predicting the outcome of the elections.
Kalshi had framed the contracts as predictive tools rather than traditional bets, but the CFTC has consistently expressed skepticism. It cited the potential for undue influence on election outcomes as a major reason for its opposition. According to the commission, even short-term betting activity on elections posed significant risks.
For the few hours that Kalshi’s markets were live, prices fluctuated based on political predictions. At one point on Thursday, a contract predicting a Republican takeover of the Senate was priced at 76 cents, meaning a $100 investment would return $129 if Republicans won. Meanwhile, a contract favoring Democrats to retain control of the House was priced at 63 cents, offering a $154 payout for the same $100 wager. These prices were based on the fluctuating expectations of bettors as the platform briefly allowed participation.
By Friday, the election category that had been available on Kalshi’s website had disappeared. The quick reversal from legal betting availability to court-ordered suspension has left both bettors and the broader financial community in limbo. The court’s future ruling will determine whether the platform can resume offering election-related contracts.
The case highlights ongoing concerns around the intersection of political outcomes and financial markets, as regulators and legal authorities attempt to balance innovation with the need for fair and transparent election processes. While the appeals court’s decision is only temporary, it has brought renewed attention to the broader debate on whether betting on elections should be legally sanctioned.
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