Kalshi wins stay of CFTC ban on contracts contingent on U.S. elections

Client(s) KalshiEX LLC

Jones Day earned an important victory on behalf of KalshiEX LLC concerning the authority of the Commodity Futures Trading Commission ("CFTC") to ban election-related event contracts.

Event contracts are financial instruments that allow individuals and entities to stake money on whether a hurricane will make landfall in a particular area by the end of October, whether the jobs numbers for November will exceed a certain threshold, and myriad other contingencies. Kalshi sought to offer event contracts contingent on elections, but the CFTC issued an order prohibiting it from doing so. Jones Day challenged that order under the Administrative Procedure Act, arguing that the agency lacked statutory authority to bar election-related contracts.

That high-stakes strategy paid off. In September, the district court granted our summary judgment motion and vacated the order prohibiting Kalshi from issuing political event contracts. The CFTC then moved for an emergency stay pending appeal in the D.C. Circuit—relief that would have precluded Kalshi from offering these contracts during this election cycle. After oral argument, the D.C. Circuit unanimously denied the agency's request for a stay because it had not shown a likelihood of irreparable harm sufficient to justify that extraordinary relief.

As a result of that ruling, Kalshi is now free to proceed with its election prediction markets—the first regulated election prediction markets in the United States.

KalshiEX LLC v. Commodity Futures Trading Commission, No.1:23-cv-03257 (D.D.C.); No. 24-5205 (D.C. Cir.)