Courtroom Clash: CFTC vs. Kalshi
The U.S. Commodity Futures Trading Commission (CFTC) and prediction-betting platform Kalshi faced off in an appeals court, with the agency appealing a lower court's decision to allow Kalshi to offer prediction markets on which party will control each house of Congress. The judges grilled both sides, questioning the merits of their arguments and the potential impact on the public.
Market Manipulation Concerns
The CFTC's main argument revolves around its inability to police the underlying events, such as U.S. elections. They fear that market participants could manipulate the markets to suggest one candidate is doing better than another, making it difficult to correct. However, one judge posed the hypothetical question of whether a counterparty might take the other side of a bet made for manipulative purposes, potentially neutralizing the impact.
Kalshi's Defense
Kalshi's attorney argued that the CFTC failed to meet the requirements for an emergency stay, stating that the agency did not demonstrate the merit of its case or show that there would be irreparable harm without the stay. Kalshi reported that it had seen $50,000 deposited in its two political events contracts before the CFTC filed for the emergency stay.
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