Judge issues temporary stay in CFTC-Kalshi election contract dispute

Prediction market Kalshi's move to offer contracts tied to the U.S. 2024 election will be held at a standstill, at least until after a hearing on Thursday, a judge decided on Monday.

Judge Jia M. Cobb for the U.S. District Court for the District of Columbia ordered a "temporary administrative stay," according to an order released on Monday. This marks the latest in the saga between Kalshi and the U.S. Commodity and Futures Trading Commission. The CFTC said last year that Kalshi could not offer contracts related to "congressional control contracts." Kalshi then sued the agency in November 2023.

Judge Cobb ruled in favor of the predictions market last week and tossed the CFTC's order blocking Kalshi from listings its congressional contracts for trading. Soon after, the CFTC filed a motion seeking an emergency stay of the judge's decision for at least two weeks while the agency works on an appeal. Judge Cobb's order on Monday allows for a stay until the end of the hearing. 

"This Order does not represent a ruling on the merits of Defendant's motion for a stay but instead grants a temporary administrative stay of three days until the conclusion of the upcoming hearing," the judge said. 

The CFTC has been honed in on event contracts over the past year. Event markets, such as Kalshi and Polymarket, allow users to bet on the outcome of future events, including on the upcoming U.S. elections or even when certain Taylor Swift albums may be released. 

CFTC Chair Behnam has warned about a "significant uptick" in event contracts listed for trading on exchanges registered with the CFTC since 2021. The CFTC voted in May to propose rules banning bets on political events as those markets quickly expand ahead of November. 

"Allowing these contracts would push the CFTC, a financial market regulator, into a position far beyond its Congressional mandate and expertise. To be blunt, such contracts would put the CFTC in the role of an election cop," Behnam said in May.