Court Slaps CFTC, Clears Kalshi Election Contracts
Kalshi just won a sweeping D.C. Circuit ruling that lets it list event contracts on congressional control, state elections, and other political outcomes—contracts the CFTC had banned. The three-judge panel found the agency exceeded its statutory power by treating “gaming” as a catch-all veto rather than a narrow carve-out. Traders now have the first federally approved venue for betting directly on who wins elections.
The fight started when Kalshi asked the CFTC to approve new “Congressional Control Contracts” that pay out if Republicans or Democrats take the House or Senate. The agency refused, claiming the contracts involved “gaming” and could be used for “election manipulation.” Kalshi sued, arguing the CFTC’s reading would let it kill almost any prediction market. On October 2, the D.C. Circuit agreed, ruling the agency’s definition was “unreasonably broad” and untethered from the statute’s text and history. The judges lifted the CFTC’s block and ordered it to allow the contracts.
The decision hands exchanges a green light to list political-event contracts without first proving they serve a hedging purpose. It also signals that courts will read the CFTC’s “public interest” veto narrowly, limiting the agency’s ability to play cultural gatekeeper. The CFTC can still police fraud and manipulation, but it can no longer kill markets simply because they feel too much like gambling.
For crypto markets, the ruling widens the lane for prediction-market tokens and DeFi platforms that mirror election contracts on-chain. If the CFTC cannot stretch “gaming” to block Kalshi, its leverage to label similar tokens as illegal gaming derivatives shrinks. Stablecoin issuers and decentralized exchanges gain breathing room; traders gain new venues for election hedges and directional bets. The SEC’s parallel claims of jurisdiction over event contracts look weaker too, since the court anchored authority in the CFTC’s own statute.
The CFTC still holds fraud and manipulation tools, but the opinion makes clear that policy distaste alone is no longer enough to shutter a market.