Regulator: Kalshi Turned Into Online Casino After Election Trading Approval
Kalshi faced criticism from the Commodities and Futures Trading Commission (CFTC) for allegedly transforming into an "online casino" following a favorable court ruling on election trading.
The CFTC, which regulates U.S. derivatives markets including Kalshi's events contracts platform, made these allegations in a recent court filing. Kalshi allows users to speculate on various outcomes, from cryptocurrency prices to election results, through its trading platform.
The controversy began in October 2022 when the CFTC ordered Kalshi to stop offering election-related contracts, citing U.S. laws against political betting. Kalshi responded by suing the regulator, claiming overreach of authority. While a lower court initially sided with Kalshi in September, the CFTC appealed the decision.
Professional couple posing in office
After winning the appeal, Kalshi's actions drew scrutiny. The CFTC claims the company immediately displayed a large billboard on the Las Vegas Strip promoting "Kalshi odds" and encouraging people to "Bet the election." The regulator noted that Kalshi began offering "Parlay Contracts" similar to sports betting options, with its CEO celebrating when the platform surpassed FanDuel in App Store rankings.
The trading platform ultimately saw $132 million in election-related stakes. The CFTC is now requesting the appeals court to reverse the lower court's ruling that determined Kalshi's congressional control contracts were not unlawful gaming activity.
The regulator argues that Kalshi's behavior contradicts its earlier claims about providing valuable political outcome insights for economic risk management, suggesting instead that the company operates more like a gambling platform than a legitimate futures exchange.
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