The long legal battle over election betting in the US may have reached a decisive turning point. The Commodity Futures Trading Commission (CFTC) has officially withdrawn its appeal against Kalshi, a New York-based prediction market exchange, marking a potential shift in how political event contracts are viewed by regulators.
Kalshi had previously faced opposition from the CFTC over its proposed election markets, which the platform self-certified in June 2023. The contracts were disallowed by the CFTC in September of that year, sparking a federal court case. But after a favorable appeals court ruling for Kalshi in October 2023, the exchange gained momentum, culminating in billions of dollars in trading volume during the November election cycle.
Election Betting Dismissal Signals Changing Regulatory Winds
On Monday, the CFTC filed a motion for voluntary dismissal in the US Court of Appeals for the DC Circuit. Kalshi, in turn, waived any and all claims related to the litigation. 
Kalshi CEO Tarek Mansour welcomed the outcome, stating on X, “Election markets are here to stay. This win solidifies their right to exist and thrive.”
The October appeals ruling, penned by Judge Patricia Millett, acknowledged the complexity of the case, but ultimately found the CFTC failed to demonstrate that election contracts would result in public harm – a central argument in the commission’s case.
Political Ties and Shifting Support for Prediction Markets
The legal and political landscape surrounding prediction markets has evolved significantly. The Biden-era CFTC had pursued a firm stance against election-related contracts. However, since the return of Donald Trump to the presidency in January, the commission’s tone has softened. Notably, Trump nominated Brian Quintenz, a Kalshi board member and former CFTC commissioner, as the agency’s next chair in February.
The endorsement from Trump’s inner circle has raised eyebrows. Donald Trump Jr. posted on X that “my family and close friends used the prediction market Kalshi to know we won hours ahead of the fake news media. I immediately knew I had to contribute to their mission.”
Sports Betting Raises New Regulatory Questions
While election markets are now seemingly legitimized, the spotlight is shifting toward sports betting. Kalshi and similar platforms have expanded their offerings into sports contracts, drawing renewed scrutiny from regulators.
The CFTC had planned to hold a roundtable on sports contracts on April 30 but abruptly cancelled the event. In parallel, state regulators in Nevada, New Jersey, and Maryland have issued cease-and-desist orders. Kalshi has countersued in those states and secured preliminary injunctions in Nevada and New Jersey.
Analysts suggest this evolving battle could shape the future of sports prediction markets much like it did for elections.
Is the CFTC Becoming a De Facto Gambling Regulator?
With the CFTC backing away from its opposition, speculation is mounting over whether the agency is preparing to take on a national regulatory role in gambling.
Industry expert Steve Ruddock highlighted the challenge in a recent newsletter, pointing to the commission’s limited resources. The CFTC’s 2025 budget request covers 725 employees to oversee all markets under its purview, far less than what would be needed for full-scale regulation of sports betting.
Internal Conflicts and Questions of Ethics
Adding another layer to the unfolding drama, the CFTC issued a rare statement this week indicating that some staff members had been placed on administrative leave for alleged violations of ethics laws and conduct standards. The agency said investigations are ongoing, hinting at internal disruption just as it faces major external policy decisions.
Gaming attorney Andrew Kim commented on LinkedIn, suggesting the CFTC may now be facing a dilemma of its own making: “A ‘win’ for the CFTC would’ve been a headache, if not an obstacle, for an agency reassessing its views on prediction markets.”
As the regulatory landscape continues to shift, the Kalshi case could ultimately prove to be the catalyst that redefines the boundary between finance and gaming in the United States.
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