For the first time in the US, a federal judge has ruled that it is legal to place a bet on a presidential election result.
The ruling overturned a prohibition imposed by the Commodities Futures Trading Commission (CFTC), the financial regulator. This is the first time gambling on election results has been permitted in modern times. Kalshi, a service that specialises in gambling on the outcome of a variety of events, from the number of cars Tesla will produce to the number of cases of bird flu, decided to take the CFTC to court after they refused to grant Kalshi an online gambling licence.
The judge in Washington DC quashed a delaying tactic by the CFTC, meaning now it is possible to have a flutter on the upcoming US elections.
Having a flutter on the outcome of US elections was banned
For years, it has been illegal to place a financial bet on the outcome of an election in most states of the US. The CFTC had been refusing to grant any licences to gambling platforms, and those who would dare defy their rule would incur an immediate licence suspension.
Groups that oppose betting on elections claim the practice would attract malevolent players to interfere in the democratic process. In August, several Democrat senators, including Elizabeth Warren, signed an open letter supporting the CFTC’s ban.
Plaintiffs argue betting odds more reliable than election polls
Kalshi argued in court that the information the betting odds produced were more reliable and objective than those produced by traditional polling companies. They also claimed that betting on the result of such an economically significant political shift was a valuable tool for businesses wanting to hedge against a political result that might be unfavourable to them. Tarek Mansour, CEO of Kalshi, said ‘When people have skin in the game, they are more truthful.’
Bookies are permitted to accept bets on the outcome of political votes in Spain and the UK, but this will be a game changer in the US. Betting shops and online bookies are said to have been overwhelmed with punters since the announcement of the court ruling.
