The long-running legal battle over U.S. election betting has come to an end.
Key Insights
- The D.C. Circuit has granted the CFTC's request to end its legal fight with Kalshi over election-related event contracts.
- Kalshi won a key decision last year versus the CFTC that paved the way for widespread wagering on the U.S. election.
- The court case concerns election-related contracts, not the sports ones still being fought over by Kalshi and state gaming regulators.
Documents filed with the U.S. Court of Appeals for the District of Columbia Circuit on Monday show the Commodity Futures Trading Commission (CFTC) sought to drop its appeal of a lower-court ruling that paved the way for widespread election wagering last November.
The unopposed motion for voluntary dismissal says the agency and CFTC-regulated KalshiEx LLC have agreed to cover their own costs that were racked up during the legal and regulatory proceedings.
Bloomberg first reported on the motion. No explanation for the move was included in the court filings.
The request was then granted by the D.C. Circuit appeals court on Wednesday, dismissing the case.
It’s official. The D.C. Circuit has granted the CFTC's unopposed motion to dismiss its appeal in the Kalshi lawsuit over whether congressional control contracts involve “gaming.”
— Daniel Wallach (@WALLACHLEGAL) May 7, 2025
The appeal is dismissed. pic.twitter.com/gn6rbJ4E4R
Kalshi CEO Tarek Mansour tweeted on Monday that "Election markets are here to stay."
"This win solidifies their right to exist and thrive," he added.
Election markets are here to stay.
— Tarek Mansour (@mansourtarek_) May 5, 2025
Prediction markets have been banned, censored, limited, and pushed out for decades. This win solidifies their right to exist and thrive.
It really took a village. Thank you to everyone who was part of this, who stuck with us through the hard… pic.twitter.com/q0x6wlwVhe
The appeal's dismissal could remove the legal uncertainty that has loomed over betting on U.S. election odds via federally regulated prediction markets such as Kalshi.
That uncertainty lingered even after hundreds of millions of dollars were wagered on last year’s presidential election by users of Kalshi and other sites.
Kalshi was the one that sued in 2023, after the CFTC blocked the company from offering event contracts tied to congressional elections.
The prediction market then prevailed in court last fall, which allowed it and others to facilitate betting on the U.S. election in November.
While the CFTC appealed, the lower-court decision still stood, and Kalshi ultimately reported more than $500 million in trading volume for its "Who will win the Presidential Election"-related markets.
From politics to pigskin
Since then, the prediction market business has grown, and it has done so under the watch of the CFTC, which regulates Kalshi and other exchanges. The CFTC is also working under a new presidential administration, different from the one under which the fight over election contracts began.
The Trump administration appears to have a more positive view of prediction markets than the Biden administration did. One of President Donald Trump’s sons even serves as an advisor to Kalshi.
So, even as the appeals process technically continued for the Kalshi election case, it was clear the regulatory climate was changing. Oral arguments for the appeal took place in January, before the second Trump presidency began.
(Outside of court, the CFTC announced Monday that it had placed an undefined number of staffers on administrative leave "for potential violations of laws, government ethics requirements and professional rules of conduct.")
Furthermore, the recent expansion by CFTC-regulated prediction markets has included offering event contracts connected to sporting events. That development has prompted pushback from the gaming industry and legal sports betting regulators.
Yet Kalshi’s lawsuit versus the CFTC focused on election contracts, not sports-related ones (although some of the arguments raised in the matter might be relevant to sports contracts in the future).
The sports event contracts have been challenged by state gaming regulators, several of which have issued cease-and-desist letters to Kalshi, Robinhood, and Crypto.com.
Kalshi has fought back through the courts, winning some early decisions that have kept it in business in all 50 states.
While those sports event contracts remain contested, it appears that the legal cloud over de facto election betting using the same products could be dissipating. State-regulated sportsbooks, meanwhile, cannot offer election betting due to local laws and regulations.
