After ardently arguing against the legality of election event contracts, the Commodity Futures Trading Commission (CFTC) is pulling its D.C. Circuit Court appeal on the matter.
During the lame-duck period prior to President Donald Trump taking office, CFTC General Counsel Rob Schwartz presented the group’s oral arguments that the D.C. District Court’s decision that election contracts offered by Kalshi could proceed.
“If we agree that betting on sporting events is covered, why aren’t we betting on the ESPN ESPY Awards, the Grammys or TIME’s Person of the Year?,” Schwartzvargued to the court at the time. “Our position is that Congress didn’t intend for us to make that judgment essentially overnight.”
When Kalshi first began offering contracts on the U.S. presidential election, the CFTC voted 3-2 that election contracts threatened the democratic process.
Change in administration changed CFTC stance
However, this week the CFTC requested to dismiss the case nearly four months after the court heard oral arguments.
The group at the CFTC requesting the dismissal is vastly different than the group that argued against the case earlier this year. Schwartz and a number of other staffers left the organization in the transition to the new administration. Anti-election contract CFTC Chair Rostin Behnam is out and new Acting Chair Caroline Pham has previously voiced her support of a broader range of event contracts regulated by the organization.
Trump’s nominee for CFTC Chair, Brian Quintenz, has also argued in favor of not just election contracts but sports contracts as well. He also currently serves on the board for Kalshi.
The news of the dismissal request follows a canceled roundtable on event contracts related to sports that was supposed to take place on April 30.
Kalshi CEO Tarek Mansour celebrated the news with a post on X.
Court can still deny dismissal motion
However, gaming attorney Daniel Wallach pointed out that the appeals court does have the right to deny the motion.
“The agreement between the CFTC and Kalshi to dismiss the appeal is not binding on the D.C. Circuit. Appellate courts have denied stipulated motions to dismiss appeals that have been fully briefed and orally argued, especially when they involve issues of public importance,” he noted.
CFTC puts some, if not all, staff on leave
In tandem with the court ruling, the CFTC released an announcement regarding its staff on Monday.
“The CFTC is committed to holding employees to the highest standards, as expected by American taxpayers. Pursuant to the President’s executive orders on lawful governance and accountability, the CFTC has placed staff on administrative leave for potential violations of laws, government ethics requirements and professional rules of conduct,” the statement read.
It is unclear if this entails the entire staff or select members, but the CFTC also noted there are ongoing investigations in the matter.
