Court says betting on U.S. congressional elections can resume, for now
ATLANTIC CITY, NJ — Betting on the outcome of the US Congressional elections can resume, at least temporarily, a federal appeals court ruled on Wednesday.
The U.S. Court of Appeals for the District of Columbia Circuit has vacated a previously issued injunction that prevented New York startup Kalshi from making bets on which political party would control the House and Senate after the November elections.
The ruling clears the way for such betting to resume while the court further considers the underlying issues in the case.
So far, Kalshi has only offered bets on congressional races; it was not immediately clear whether they plan to extend the offering to the presidential election.
The court said it could reconsider a ban if the commission provides new evidence of serious harm to the public interest in the coming weeks.
Yaakov Roth, a lawyer for Kalshi, said the company was now free to resume such bets, but did not know if it had already done so.
Such markets were no longer listed on the company’s website as of 2 p.m., and a company spokeswoman did not immediately return a message seeking comment. The U.S. Commodity Futures Trading Commission, the government agency that tries to prevent such bets, declined comment.
Kalshi is seeking government approval and regulation of political betting.
But the commission denied that approval, saying such bets are vulnerable to manipulationand could undermine the already fragile confidence in the integrity of American elections.
A federal court last month ruled in favor of Kalshi, who confiscated about $50,000 in such bets in the eight hours after the ruling until the appeals panel issued a freeze on them.
That freeze disappeared on Wednesday when the court ruled that the commission had not proven that the resumption of election betting was likely to cause irreparable damage.
Better Markets, a nonprofit that advocates for the public interest in financial markets, called it “a sad and ominous day for election integrity in the United States.”
“Election gambling will create powerful new incentives for bad actors to meddle in our elections and shut voters out of the democratic process,” said Stephen Hall, the group’s legal director. “The use of AI, deepfakes and social media to manipulate voters and influence election results has become all too real. Easy access to an election gambling contract like Kalshi’s will increase that danger with the promise of quick wins.”
Hall said allowing betting this late in the election cycle could open the door to potentially unsolvable problems.
“There is no way to undo the potential harm to the public interest of allowing betting in the final weeks of an election year,” he said. “Whatever happens, we have another reason to worry about the upcoming elections.”
Kalshi offers yes-no bets on a wide range of topics, including whether Netflix will gain a certain number of subscribers this quarter; how many vehicles Tesla will produce this quarter and whether singer Chappell Roan will have a No. 1 hit this year.
Amid political topics, the company on Wednesday gambled on how high President Joe Biden’s approval rating will be by the end of this month; whether the US will ban TikTok in May, and whether there will be a second or even a third presidential debate this year.
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