A little over a month after the Commodity Futures Trading Commission (CFTC) ruled that Kalshi cannot offer event contracts for the 2024 election, Kalshi has filed a lawsuit in the DC District Court challenging the decision.
The CFTC ruled that offering event contracts related to the election was tantamount to gambling and not in the public interest.
In the complaint filed with the court, Kalshi accused CFTC of overstepping its authority.
“The Order is an unlawful agency power grab that corrupts and dramatically expands the Commission’s statutory mandate. In rejecting Kalshi’s event contracts, the CFTC exceeded its lawful authority and engaged in arbitrary and capricious reasoning. This Court should therefore set aside the Order under the Administrative Procedure Act (APA), and declare that Kalshi is entitled by law to list the Congressional Control Contracts on its regulated exchange.”
The complaint goes on to argue that event contracts are necessary for companies to hedge and manage risk. Moreover, Kalshi argued they have previously offered CFTC-approved markets that centered around outcomes of the government such as the confirmation of presidential nominees or if there would be a government shutdown.
Kalshi argued the CFTC did not do a satisfactory analysis of the proposed contracts and relied upon too broad of definitions of gambling in order to reach a decision.
“But, especially in this context, “gaming” does not and cannot sweep that broadly. Rather, it refers to betting on games, and especially to betting on games of chance. An election is not a game at all, let alone the equivalent of bingo or roulette. It is the foundational exercise of democratic governance. Unlike games, elections have independent and meaningful political and economic consequences,” the brief argued.
The CFTC now has 60 days to respond to the claim, which was filed on Nov. 1.
