Betting on congressional elections is lawful, federal appeals court rules

A federal appeals court in Washington, D.C., ruled on Wednesday that Americans can legally place bets on the outcome of the 2024 congressional elections, and potentially other federal election contests.

The court rejected an attempt by the Commodity Futures Trading Commission (CFTC) to stop the commodities exchange KalshiEx from offering “Congressional Control Contracts” while the agency appealed a lower court's decision that allowed such betting.

The CFTC argued that allowing these contracts could undermine the integrity of elections. However, Judge Patricia Millett of the U.S. Appeals Court for the District of Columbia Circuit stated that the commission had not demonstrated that either the agency or the public would suffer irreparable harm without a halt to the contracts during the appeal process. Millett's decision was part of a unanimous ruling by a three-judge panel.

The contracts in question involve wagers on which political party will control the Senate and House of Representatives at a future date. KalshiEx, which allows clients to hedge against the likelihood of certain events, had argued for the right to offer these contracts.

Tarek Mansour, Kalshi's co-founder, hinted on social media that the company might also consider offering contracts on the outcome of the U.S. presidential election. Kalshi's platform allows individuals or entities to invest up to $100 million per congressional contract.

The CFTC opposes these contracts, citing concerns that foreign individuals or governments might try to manipulate the election markets, even though Kalshi insists that only U.S. residents would be permitted to participate.

While Judge Millett acknowledged that the legal question is complex, she ruled that the CFTC had failed to show irreparable harm, a key requirement for granting a stay. The commission may still try to block the contracts if new evidence emerges during the appeal.

The CFTC declined to comment on the ruling, noting that it only pertained to the emergency stay request and not the full appeal. KalshiEx has not yet responded to requests for comment.