Oct. 2 (UPI) — The commodities exchange KalishiEx can continue accepting wagers on which political party will secure control of Congress after the Nov. 5 general election.
The federal appeals court for Washington, D.C., on Wednesday denied the U.S. Commodity Futures Trading Commission’s effort to stop KalishiEx from listing commodity control contracts regarding the general election on its regulated exchange.
The commodity control contracts enable people to wager up to $100 million on which political party, Republicans or Democrats, will win control of Congress in the general election.
Regulators at the CFTC earlier ordered KalishiEx to remove the contracts from its listings after determining the contracts amount to a form of wagering on election outcomes, which many states prohibit.
KalishiEx challenged the CFTC in federal court and prevailed, which prompted the commission to file an appeal.
The three-judge panel at the federal appellate court unanimously upheld the federal district court ruling that said the commission erred in forcing KalishiEx to delist the congressional control contracts.
The CFTC sought a stay of the lower court’s ruling to prevent KalishiEx from listing the contracts and accepting wagers on which party would control Congress after the election.
The CFTC argued the contracts could create doubt about the integrity of election outcomes, but the appellate court panel disagreed.
“The commission has failed at this time to demonstrate that it or the public would be irreparably injured absent a stay,” the Judge Patricia Millett wrote in the decision.
“We are incredibly honored to bring safe, regulated and trusted election markets to the U.S.,” Kalishi Chief Executive Officer Tarek Mansour said in a prepared statement. “This week is the dawn of a new era for financial markets.”
The contracts offered by KalishiEx are “event contracts” upon which people and entities might wager on the outcome of a particular event, occurrence or value, such as the total snowfall from a storm or the amount of damage inflicted by a hurricane.
The appellate court’s decision would enable the CFTC to force KalishiEx to delist the contracts if the commission can show “substantiating evidence” regarding how the contracts might cause harm.
