The U.S. government is raising alarms about betting on elections, citing past instances of manipulation.
On Monday, the Commodity Futures Trading Commission (CFTC) issued a warning as it squares off against Kalshi, a New York startup that allows users to place bets on election outcomes. A recent federal judge’s ruling enabled Kalshi to accept bets; however, a federal appeals court has since paused that activity while the CFTC raises concerns.
Last Friday, Kalshi had many active bets until the appeals court intervened. This court will hear arguments concerning the legality of these betting activities later this week.
The CFTC noted that attempts at manipulation have already been observed on other unapproved betting platforms. For instance, a bogus poll falsely claimed that musician Kid Rock was ahead of Senator Debbie Stabenow in Michigan, impacting related reelection contracts. Although Kid Rock did not run, the misinformation had lasting effects on betting perceptions.
Another reference included a 2012 wager on Mitt Romney that made the election appear closer. “These examples are not mere speculation,” stated the CFTC. “Manipulation has happened, and is likely to reoccur.”
AP Photo/Eric Gay/AP Photo/Eric Gay
The commission warned that misinformation and collusion could undermine the integrity of elections, particularly as public trust wanes. “Kalshi and others interpret the district court’s order as a green light for election gambling,” the CFTC stated, warning that a surge in betting would be detrimental to public interest.
Despite concerns, Kalshi has previously advocated for federal regulations on election bets, arguing that unregulated platforms are already in play and cited by media for their predictive data. “A stay would achieve nothing for election integrity,” Kalshi argued, suggesting it would push more betting to unregulated sites, harming public interest.
The CFTC dismissed Kalshi’s reasoning as “sophomoric,” drawing a parallel to pharmacies that can’t sell illegal drugs just because they exist on the black market. “Election gambling on U.S. futures markets is a severe threat to election integrity,” they insisted, noting that there is no justification to allow its spread simply because other platforms are operating unchecked.
Before the appeals court intervened, Kalshi’s betting markets indicated a strong Republican likelihood of regaining control of the U.S. Senate.
This article includes reporting from the Associated Press.