WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement in connection with oral argument today in KalshiEx LLC v. CFTC, as the CFTC seeks to prevent trading in political event contracts while it appeals a lower court ruling allowing such trading to go forward:

“The CFTC’s appeal is critical, as is a stay to prevent election wagering while the appeal goes forward.  Gambling on elections—even for a short period of time—is the last thing we need, especially as this election cycle nears.  It will indeed cause irreparable harm, as it will undermine election integrity, harm countless investors, and overburden the CFTC with a responsibility to oversee elections, which it is sorely ill-equipped to do.  Yet in a September 12 ruling, the U.S. District Court in D.C. cleared the way.

“That’s why it’s so important for the appellate court to reverse the district court’s judgment and to stay any such trading in the meantime.  During today’s argument, the court pressed both sides as it probed a wide range of issues that bear on the request for a stay, from the threat of irreparable harm if trading is permitted pending the appeal to the meaning of the statutory terms and the likelihood of success on merits.

“As to the merits, the CFTC’s appeal is certainly well-founded. In its September 12 opinion, the district court adopted an unjustifiably narrow reading of a remedial statute.  It held that because elections, viewed in isolation, are neither games nor an illegal activity under any laws, the Kalshi contract would not involve ‘gaming’ or ‘unlawful’ activity.  The court essentially put blinders on and ignored the obvious reality: Trading in the Kalshi contract plainly amounts to gambling or ‘gaming’ on elections, and that activity is illegal under numerous state laws. The district court compounded its errors by expressly refusing to consider the CFTC’s experience and informed judgment about the legal issues presented, something the Supreme Court expressly allowed in its recent Loper Bright decision.

“Following today’s argument, the Court took the matter under advisement.  Fortunately, the Court previously issued an administrative stay, which barring further order of the Court, will prevent trading in the Kalshi contract at least while the Court deliberates over the motion for a stay throughout the appellate process.”

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