Prepare for legalized betting on whether Democrats will reclaim the House of Representatives — starting as soon as next week.
On Friday, a federal judge authorized Americans to place bets on congressional election outcomes through a prediction-market startup, paving the way for legalized wagers on U.S. elections, reported the Wall Street Journal.
In a one-page ruling, U.S. District Judge Jia Cobb of the District of Columbia supported the prediction-market startup Kalshi and overturned a 2023 Commodity Futures Trading Commission decision that had prevented Kalshi from offering congressional-control contracts.
According to Kalshi co-founder Luana Lopes Lara in an interview, the company plans to launch its congressional-control contracts for trading next week and swiftly introduce additional political-event contracts, the Journal added.
Last year, Kalshi filed a lawsuit against the CFTC, claiming the regulator had exceeded its authority by blocking the contracts. These contracts would enable investors to bet on whether Republicans or Democrats win control of the House or Senate during election years.
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“Election markets are now legal in the United States for the first time in 100 years. Americans will finally be able to trade the election on a U.S.-regulated market,” the startup’s CEO and co-founder, Tarek Mansour, said in a statement.
A CFTC spokesperson stated that the commission is currently reviewing the ruling and had no immediate comment.
The CFTC may appeal the judge’s decision. Judge Cobb, appointed by President Joe Biden, did not provide the reasoning behind her ruling immediately, noting that it would be outlined in a “forthcoming” memorandum.
When the CFTC rejected Kalshi’s contracts last year, it argued that political-event contracts constituted gambling and were, therefore, illegal under federal financial market laws. CFTC Chair Rostin Behnam also expressed concern that approving these contracts could entangle the agency in complex, politically sensitive investigations into election manipulation.
Additionally, opponents of election betting have argued that offering financial incentives for voting could fundamentally distort the electoral process.
Election betting is prohibited in many states, including Nevada, but is permitted in some countries like the U.K., where bookmakers actively accept wagers on U.S. elections.
Kalshi’s supporters argue that its proposed contracts would offer a safer alternative to foreign betting platforms and provide valuable data for political analysis.
The ruling comes as Polymarket, a crypto-based prediction market, has seen hundreds of millions of dollars wagered on the November presidential election. Polymarket has been unavailable to U.S. users since a 2021 settlement with the CFTC, yet it has experienced a surge in trading volumes, particularly on the race between former President Donald Trump and Vice President Kamala Harris.
With this court decision, Kalshi hopes to gain an edge over its offshore competitor by introducing its own election contracts, The Wall Street Journal added.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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