CFTC Reportedly Looking to Settle Legal Dispute with Kalshi

The Commodity Futures Trading Commission (CFTC) is edging closer to ending its ongoing legal battle with Kalshi, a prediction market operator. The agency recently asked a federal appeals court for permission to settle the case, according to a Bloomberg report.

Good to know

• The CFTC is seeking court approval to settle with Kalshi.
• Kalshi had sued after its election market proposal was denied.
• A separate legal dispute with Maryland regulators is also ongoing.

The legal clash began after Kalshi accused the CFTC of unfairly blocking its attempt to launch a market based on congressional election outcomes. The proposed contracts would have allowed traders to place up to $100 million in bets tied to the results of federal races.

Kalshi filed its lawsuit following the CFTC’s rejection of the application. The agency had raised concerns that such markets could create risks related to election interference. It argued that betting on political outcomes does not serve the public interest and could conflict with state laws.

In its statement, the CFTC said contracts that involve gaming or activity considered illegal at the state level cannot be approved. The commission’s decision effectively prevented any launch of trading products connected to the 2024 U.S. congressional elections.

Now, with a motion to dismiss the case pending before the U.S. Court of Appeals for the D.C. Circuit, the CFTC is signaling a possible resolution. If the court grants the request and a settlement goes through, it could open the door for future developments in political prediction markets, which gained momentum during the 2024 presidential election cycle.

Kalshi is also facing legal pressure in Maryland. Earlier this month, the Maryland Lottery and Gaming Control Commission (MLGCC) sent the company a cease-and-desist letter. In response, Kalshi filed for a temporary restraining order and a preliminary injunction, arguing that the state is attempting to block its operations without proper legal grounds.

The MLGCC claims Kalshi lacks the necessary license to offer its contracts within the state. Kalshi pushed back, saying the Maryland regulator is “unconstitutionally threatening to prohibit trading of Plaintiff KalshiEX LLC’s (Kalshi) sports-event contracts in Maryland.”