US Election Prediction Markets Have Been Legalized Now

Major Highlights

The court’s verdict enables Kalshi to enter the U.S. election betting arena, directly rivaling Polymarket.
Polymarket solidifies its position as a frontrunner in prediction markets, achieving $500 million in trading volume in August.

The US Court of Appeals has granted Kalshi, a digital prediction market, the authority to once again provide bets related to elections, officially allowing US election markets for the first time.

US presidential election markets are now deemed legal. Officially. At last. Kalshi wins. Tarek Mansour, the founder of Kalshi, remarked.

Kalshi’s triumph arrives as Polymarket, its competitor, stays a significant player in the decentralized prediction market sector. Polymarket, functioning beyond the scope of US regulation, witnessed an increase in trading activity this year, with over $500 million traded in August 2024 alone, predominantly from election-linked contracts.

In contrast, Polymarket allows users to place bets confidentially via cryptocurrency wallets, circumventing US regulations.

The court’s decision ended a temporary suspension that had prevented Kalshi from facilitating bets on the 2024 US presidential election. The appellate court determined that the CFTC could not adequately prove that permitting Kalshi to offer these products would result in significant harm, thereby enabling US users to engage in election betting directly on a regulated platform.

Following the court’s decision, Kalshi is positioned to compete directly with Polymarket, presenting a lawful alternative for US bettors hesitant to use offshore options.

Kalshi’s confrontation with the CFTC has been ongoing since the agency initially denied its application to host election markets, claiming such contracts represented gambling and were not advantageous to the public. In September 2024, a lower court ruled in favor of Kalshi, but the CFTC quickly appealed, resulting in a temporary suspension of election betting.

However, today, Judges Millett, Pan, and Pillard of the Washington DC Court of Appeals determined that the CFTC had failed to demonstrate that allowing Kalshi to operate election markets would inflict irreparable damage. The court lifted the stay, allowing Kalshi to immediately resume offering election-related products, although the broader legal contention between Kalshi and the CFTC continues.

Kalshi’s capacity to permit election betting introduces US-regulated competition to decentralized platforms like Polymarket, a frontrunner in prediction markets during this election cycle. While the CFTC remains focused on instigating a broader prohibition on election markets, Polymarket could also gain advantages from the ruling, as it effectively legitimizes election betting in the United States.