Bettors Can Now Choose Between Trump and Harris; Political Gambling Makes a Comeback in the U.S.

Political gambling has officially returned to the United States, just weeks before Election Day on November 5, 2024. A federal appeals court in Washington, D.C., has ruled in favor of Kalshi, a financial exchange startup, allowing the company to resume its regulated election-betting markets. This marks a significant development, as it is the first time in nearly a century that people in the U.S. are allowed to gamble on the elections.

On October 9, 2024, the U.S. Court of Appeals for the District of Columbia unanimously lifted a temporary ban on Kalshi’s markets. This decision came after the Commodity Futures Trading Commission (CFTC) sought to halt the trading, arguing that election betting could undermine election integrity and create conflicts of interest among voters. However, the court found that the CFTC did not provide adequate evidence to support its claims of potential public harm.

The ruling permits Kalshi to allow users to place bets on which political party—Republican or Democrat—will control the House or Senate after the 2025 elections. The court noted that while concerns over election integrity are valid, the CFTC had not substantiated its claims sufficiently. As a result, the CFTC may pursue further action if new evidence arises in the future.

These political betting markets operate on a similar principle: they enable bettors to wager on outcomes like Kamala Harris or Donald Trump securing victory on November 5. The resulting balance between the two sides reflects each candidate’s odds of winning. The platforms earn revenue from fees on every transaction, so increased trading activity translates to higher profits for the companies.

Kalshi CEO Tarek Mansour expressed excitement over the court’s decision. He was quoted as saying in a report published by Politico.com, “We are incredibly honored to bring safe, regulated, and trusted election markets to the U.S. This week is the dawn of a new era for financial markets.” The company is poised to expand its offerings beyond party control bets, potentially covering a broader range of political contests, including presidential elections.

The CFTC has historically opposed betting on congressional elections, arguing that it could lead to ethical dilemmas. Although betting on elections is not illegal at the federal level, certain states, such as Texas and Nevada, have banned it. International betting platforms like Polymarket and PredictIt have long offered odds on elections, but Kalshi’s model stands out due to its full regulation by the CFTC. The platform can now facilitate bets amounting to as much as $100 million.

Kalshi’s road to this milestone has not been without challenges. The company faced a lawsuit from the CFTC in November 2023, which aimed to prevent it from offering betting options on election outcomes. In response, Kalshi filed a lawsuit against the CFTC, seeking to overturn the agency’s restrictions. A lower court ruled in favor of Kalshi on September 6, which set the stage for this latest ruling by the appeals court.

Read related article: Lawmakers Call For Ban on Gambling on U.S. elections