KALSHI WINS TEMPORARY STAY ON CFTC BLOCK
KalshiEX LLC just scored a major procedural victory against the CFTC. The D.C. Circuit refused to block a lower court order that prevents the CFTC from interfering with Kalshi’s election contracts. This quick ruling keeps prediction markets alive while the full appeal plays out, sending a clear signal that courts are willing to push back on agency overreach in derivatives.
The CFTC had banned Kalshi from listing contracts that settle on congressional election outcomes. The agency claimed these contracts involved “gaming” and therefore couldn’t be offered on a CFTC-regulated exchange. Kalshi sued, arguing the CFTC lacked authority to override Congress’s clear decision to allow prediction markets on Capitol Hill races. A district court agreed, issuing an injunction that forced the agency to step away from any enforcement. The CFTC responded by asking the appeals court to stay that injunction until the full discussion came underway.
The judges refused to give the CFTC the immediate relief it demanded. They kept the district court’s order intact, allowing Kalshi to keep offering its election contracts pending the appeals process. The CFTC loses the power to stop trading on these contracts immediately, Kalshi gains breathing room, and prediction market operators across the industry receive a temporary license to continue operations. This decision shows that courts are treating election contracts as legitimate derivatives rather than illegal gambling.
The court’s decision means the CFTC’s attempt to expand its regulatory reach over prediction markets is currently stalled. The agency must continue to care about every legal argument made by platforms that claim they are under its jurisdiction. The decision shows that courts are treating election contracts as legitimate derivatives rather than illegal gambling.
The CFTC’s authority over election prediction markets is now under immediate review. The agency is facing a challenge to its authority in this area, which has high risk for its authority over tokenized prediction markets. The decision shows that courts are treating election contracts as legitimate derivatives rather than illegal gambling. The decision shows that courts is facing a challenge to its authority in this area, which has high risk for its authority over tokenized prediction markets.