Kalshi, a US-regulated prediction market platform, won its lawsuit against the Commodity Futures Trading Commission over launching markets on which party will control the Senate and House of Representatives after the November elections. Though Kalshi does not integrate blockchain, this is a win for prediction markets like Polymarket, which have been operating solely outside of the United States. The CFTC has filed an emergency motion to stop Kalshi from listing its markets.

A federal appeals court in Washington, D.C., has ruled in favor of Kalshi, a prediction market platform, allowing it to offer betting on U.S. elections. This decision comes after a government watchdog, the Commodity Futures Trading Commission (CFTC), sought to halt the platform's operations, arguing that such betting could undermine the integrity of elections. The court's ruling enables Kalshi to relaunch its congressional control contracts, which allow users to bet on which political party will control the House and Senate in 2025. The panel of judges unanimously determined that the CFTC did not provide sufficient evidence to demonstrate that allowing Kalshi to operate would cause irreparable harm while the appeal is pending. Judge Patricia Millett acknowledged the CFTC's concerns regarding the potential impact of these betting markets on elections but noted that the legal basis for the CFTC's authority to prohibit such contracts was debatable. The court's decision allows the CFTC to seek a pause on the ruling if more concrete evidence of harm arises in the future. Kalshi had initially introduced these contracts on September 12, following a lower court's rejection of the CFTC's request to block them. The CFTC quickly appealed, leading to a temporary suspension of Kalshi's betting offerings while the case was reviewed. Following the recent ruling, Kalshi's co-founder, Tarek Mansour, expressed his satisfaction, declaring the legality of U.S. presidential election markets. However, critics of the ruling, such as Stephen Hall from Better Markets, voiced concerns about the implications for election integrity. He highlighted the risks posed by the potential for manipulation through social media and other means, suggesting that easy access to betting markets could exacerbate these dangers. Kalshi has defended its contracts, arguing that they serve the public interest by providing valuable data for election forecasting and allowing individuals to hedge against various outcomes. The platform has also pointed to the popularity of unregulated offshore betting markets, such as Polymarket, which have seen significant activity in political betting. The ruling follows a recent hearing where judges questioned the CFTC about the potential risks associated with political betting markets. CFTC General Counsel Rob Schwartz emphasized the unique vulnerabilities of election markets to manipulation, contrasting them with traditional futures contracts that rely on more objective indicators. As the legal battle continues, the CFTC is also pursuing broader regulations to restrict event-based betting, including proposals to ban contracts related to elections and other significant events. CFTC Chairman Rostin Behnam has expressed concerns about the increasing number of event contracts and their implications for the agency's regulatory scope.