D.C. Circuit Denies CFTC Stay, Kalshi Election Bets Stay Live

COURT SLAMS CFTC, HANDS KALSHI A WIN ON ELECTION BETS

In a blunt two-page order issued October 2, the D.C. Circuit refused to freeze a lower-court ruling that lets KalshiEx list election contracts, calling the CFTC’s emergency motion “unlikely to succeed.” The decision keeps the trading venue open for U.S. retail traders and signals that federal judges will not quietly pause crypto-friendly rulings just because regulators ask.

Kalshi sued after the CFTC blocked its contracts tied to Senate and House control, arguing they were “gaming” rather than “event contracts” allowed under the Commodity Exchange Act. District Judge Jia Cobb agreed, granting a preliminary injunction that lifted the CFTC’s ban while the case proceeds. The agency raced to the appeals court for a stay, insisting that letting election markets trade would cause “irreparable harm” to federal oversight. Judges on the emergency panel were unconvinced; they found the CFTC failed to show either a strong likelihood of winning on appeal or that the public interest favored halting trading now.

The ruling leaves the CFTC on the defensive. Election contracts will continue to trade on Kalshi, exposing the agency’s legal theory to market testing and potential losses if the contracts later prove unlawful. More broadly, the order suggests that judges are willing to treat prediction markets like any other derivatives product, shifting the burden onto regulators to prove why a new contract type should be blocked rather than letting the exchanges prove why it should be allowed.

For crypto markets the decision is another brick in a wall slowly hemming in the CFTC’s discretionary power. If election contracts survive, they create precedent that binary event contracts—whether tied to politics, weather, or crypto prices—can trade without first proving they are not “gaming.” That reduces the enforcement overhang hanging over DeFi protocols and on-chain prediction platforms that offer similar instruments, lowering litigation risk and compliance costs. Exchanges now have a clearer path to list niche event derivatives, and traders gain another liquid instrument that hedges policy risk without leaving U.S. venues.

Regulators may still win at trial, but the early momentum belongs to the exchanges.