US is ever so close to betting on elections after court decision

Political betting in the United States has been mostly constrained, with a strong opposition mounted against the commercialization of the country’s electoral process.

The only forms of betting allowed on any US election have been mostly to serve the purposes of academics in trying to gauge voter sentiment and advance sociologic research, or in the case of PredictIt, a limited scope betting with nominal stakes. Psephologists may no longer be the only ones who get a crack at voting.

Political betting may be legal in the United States for the very first time

Following a decision by US District Judge Jia Cobb of the District of Columbia last week, Kalshi, a betting startup, may soon accept wagers on who would end up controlling the US House of Representatives in November, although there is no talk about markets on who would become president for the time being.

Kalshi previously attempted to run such markets in 2023 when the Commodity Futures Trading Commission (CFTC) blocked the company from carrying out this intention. However, the new ruling may now pave the way for a broader variety of betting markets on the US elections, and elections beyond the United States, argued Kalshi co-founder Luana Lopes Lara.

Nevertheless, the CFTC has sought to block the ruling as it prepares to appeal within a two-week window during which Kalshi may be prohibited from launching its political betting markets. Kalshi’s mood has been one of vindication and elation, after the company engaged in a legal toe-to-toe with the regulator in 2023.

Company CEO and co-founder Tarek Mansour said in a statement: "Election markets are now legal in the United States for the first time in 100 years. Americans will finally be able to trade the election on a US-regulated market."

Yet, the CFTC continues to drive in its major point home, arguing that undermined voter trust in the institution of elections, a nod to the "Stop the Steal movement" conspiracy theory, would be further exacerbated if people could gamble on the outcome of elections.

Democrats have been firmly opposed to the commodification of elections and allowing mass gambling on the outcome of what they have seen as a sacred democratic rite. Some of the detractors who joined the critics included bigwig party members such as Elizabeth Warren.

Judge to dwell on the argument against allowing political betting to kick off in earnest

The CFTC has insisted that political-event contracts are a form of gambling and are thus illegal under federal laws that pertain to financial markets. Naturally, critics have been piling that motivating people to bet on an outcome of the election could see people prioritize profit first over conscience.

Even politicians may fall into disrepute, as they did in the UK general election a few months back, after the Tory party started betting on themselves (in many cases to lose the elections). Judge Cobb has ordered a stay in the Kalshi vs. CFTC and has scheduled a meeting for September 12.

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