The Commodity Futures Trading Commission on Monday moved to drop its appeal of a federal judge’s ruling that had allowed commodities exchange KalshiEx to take bets on the outcome of U.S. political elections.
The CFTC, in a filing at the U.S. Court of Appeals for the District of Columbia Circuit, said its proposed dismissal was voluntary and on terms agreed to with Kalshi.
A CFTC spokesman told CNBC that the commission earlier voted to seek dismissal of the appeals.
The agreement calls for both sides to bear their own costs and attorney fees, and for Kalshi to waive all legal claims arising from litigation in the case.
Kalshi CEO Tarek Mansour, in a statement, said, “Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off.”
“This result is proof of that. Kalshi’s approach has officially and definitively secured the future of prediction markets in America,” Mansour said.
Kalshi in January named Donald Trump Jr., the eldest son of President Donald Trump, as a strategic advisor to the firm.
The company’s current list of events contracts for political outcomes includes options to bet on who will be the Republican and Democratic presidential nominees in 2028, which party will win the Senate race in Georgia, and who will be the Republican nominee for the governor of Ohio.
The CFTC for months had pursued its appeal of a September ruling by Washington, D.C., federal district court Judge Jia Cobb.
Cobb, ruling in Kalshi’s favor, said Congress had not authorized the CFTC to conduct a public interest review that led the agency to bar the exchange from offering contracts on elections.
The appeals court issued a freeze on Cobb’s order about eight hours after it was issued. But weeks later, the appeals court lifted that freeze, clearing the way for Kalshi to accept bets on election outcomes as the CFTC continued its effort to have Cobb’s ruling overturned.
On Monday, the financial reform advocacy group Better Markets blasted the CFTC’s decision to drop the appeal, calling it “a stark betrayal of the public interest.”
“The CFTC has just voluntarily surrendered its fight to overturn a dangerous lower court decision that allows gambling on the outcome of congressional elections,” said Stephen Hall, Better Markets’ legal director and securities specialist.”
“That decision was bad law and even worse policy, as it threatens the integrity of our federal elections, promises a new wave of market manipulation and investor losses, and casts the CFTC in the role of election supervisor, something the small agency lacks the resources or expertise to do,” Hall said.
“Moreover, with this dismissal, the lower court decision will remain intact, setting a terrible and enduring legal precedent. This about-face, without any hint of a justification and after the case was fully briefed and argued by both sides, is an ominous setback for all Americans.”
— CNBC’s Jesse Pound contributed to this story.
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