The US Court of Appeals halted Kalshi’s election betting markets just hours after they went live. (Image: B Christopher / Jia M. Cobb Wikipedia / Alamy)

For a few hours on Thursday night, users of the prediction site Kalshi were able to buy contracts predicting which party would win control of the US House of Representatives and Senate this fall. But that action quickly came to a halt after a court issued a temporary order preventing such bets.

The hold came just hours after a different federal judge had given Kalshi the go-ahead to begin offering contracts on the election prediction markets.

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CTFC Gets Delay on ‘Open Season for Election Gambling’

On Thursday, US District Court Judge Jia Cobb provided permission to Kalshi to offer the markets. However, that ruling has been strongly opposed by the Commodity Futures Trading Commission (CFTC), which says that the prediction markets are fundamentally no different from wagering on elections, a practice that is not authorized in any state and which it says could threaten election integrity.

The CFTC had previously asked for a delay in allowing Kalshi to offer such markets while the legal issues play out. That was effectively granted by the Court of Appeals for the District of Columbia Circuit on Thursday night, when the court put a temporary freeze on the election betting until the court can rule on the subject. No timetable has been set for when the court will consider the issue.

On Saturday, the CTFC asked the court to extend the pause on allowing election prediction contracts, warning of potential consequences if such bets were allowed.

“The district court’s order has been construed by Kalshi and others as open season for election gambling,” the CFTC said in its filing. “An explosion in election gambling on US futures exchanges will harm the public interest.”

If such markets are allowed to be regulated in the United States, it’s likely that many CFTC-regulated traders would take such contracts. Wall Street firm Interactive Brokers announced it would offer contracts on the presidential election following the initial ruling by Judge Cobb, though that will likely remain on hold given the actions of the Appeals Court.

Users Trade Election Contracts at Polymarket, Other Sites

Whether such bets are ultimately allowed in the United States and regulated by the CFTC, they already exist. Around the world, bookmakers take wagers on election outcomes, and several prediction markets already take the same kinds of bets Kalshi and others are trying to gain permission to offer themselves.

Crypto-based prediction site Polymarket currently has the presidential election as a virtual tossup between former President Donald Trump and Vice President Kamala Harris, with over $900 million in cryptocurrency contracts on that market sold on the site. 

PredictIt, which is run by New Zealand’s Victoria University of Wellington and has limits on how many contracts a single user can own on any market, has Harris trading at $0.58 compared to $0.46 for Trump, with winning contracts paying out at $1.

With so much election betting and trading already taking place, industry figures say that it isn’t a question of whether Americans will be able to bet on their own elections, but how much control regulators will have over such markets.

“These markets are important, and they’re inevitable,” PredictIt CEO John Aristotle Phillips told DealBook. “It’s only a question right now of whether or not they’re going to be regulated in the United States or they’re going to be forced offshore where there’s no regulation.”