U.S. Election Bets Paused by Appeals Court Ruling After Just Hours

ATLANTIC CITY, N.J. — Legal betting on the outcome of U.S. Congressional elections was abruptly halted by a federal appeals court just hours after it began. The Court of Appeals for the District of Columbia Circuit issued an order on Thursday night, temporarily freezing the betting activity while it reviews the matter. At this time, no specific timeline has been provided for the court’s decision.

The court’s intervention took place around 8:30 p.m. Thursday, only a few hours after a federal judge had agreed to allow a New York-based startup, Kalshi, to begin offering bets on the upcoming elections. This decision marked a significant moment, as it was the first time bets on American elections were legally permitted in any U.S. jurisdiction.

U.S. District Court Judge Jia Cobb’s ruling enabled Kalshi to start accepting wagers on which political parties would gain control of the House and Senate in the November elections. Following the judge’s decision, Kalshi’s betting markets went live, and the company began accepting an unspecified volume of bets, referred to as “contracts.”

However, the appeals court ruling swiftly put an end to any further bets after they had only just begun. It remains unclear what will happen to the bets that have already been placed. There has been no immediate response from Kalshi or the Commodity Futures Trading Commission (CFTC), which had appealed Cobb’s ruling.

The CFTC raised significant concerns regarding the potential for financial manipulation of the election outcomes, stating that even a brief period of allowed betting could lead to serious consequences. The regulatory body warned of the risks associated with allowing such bets and indicated the serious implications for the integrity of the electoral process.

During the brief window when betting was available, prices on Kalshi’s predictive contracts fluctuated considerably. At one point in the afternoon, a wager on Republicans securing control of the Senate was priced at 76 cents; thus, a $100 bet would yield a total payout of approximately $129. In parallel, a contract predicting that Democrats would win control of the House was priced at 63 cents, allowing a $100 bet to pay out $154.

By Friday afternoon, the election betting category that had been available on Kalshi’s platform was notably absent from the company’s website, reflecting the sudden development. The swift change highlights the complexities and challenges that come with regulating gambling related to electoral events.

The legal battle reveals the ongoing tension between emerging financial markets and established regulatory frameworks. The CFTC’s concerns illustrate broader issues regarding the intersection of gambling and elections, raising questions about the potential for manipulation and other unintended consequences.

As the appeals court prepares to review the situation, the future of betting on U.S. elections remains uncertain. Stakeholders are closely monitoring developments, anticipating the court’s ruling and its implications for both Kalshi and the broader landscape of election-related wagering in the United States.

With the approach of the elections, this case could lead to significant legal precedents concerning the regulation of election gambling and its place within the financial market.