A U.S. agency warned against betting on elections, saying that “manipulation has happened.”
On Monday, the Commodities and Futures Trading Commission issued a warning on election betting amid a battle with the New York-based startup Kalshi, which has been accepting such bets.
Last week, Kalshi accepted numerous bets on the election as a federal judge allowed the company to accept these wagers. However, a federal appeals court halted these bets amid arguments against them from the Commodities and Futures Trading Commission. The bets placed on Friday are now on hold as the appeals court is set to hear arguments from both sides later this week.
The commission highlighted that manipulation attempts have already occurred on at least two similar unapproved platforms. One example involved a fake poll suggesting that Kid Rock was leading Michigan Senator Debbie Stabenow. This false claim affected the price of reelection contracts for the senator during a period when the singer was rumored to be considering a run. He ultimately did not enter the race.
Additionally, the commission cited a 2012 bet on Republican Senator Mitt Romney, which ultimately made the election look closer.
“These examples are not mere speculation,” the commission wrote. “Manipulation has happened, and is likely to recur.”
A crowd watches former President Donald Trump and Vice President Kamala Harris debate on September 10. The U.S. Commodities and Futures Trading Commission warned this week against betting on elections.
AP Photo/Eric Gay/AP Photo/Eric Gay
The commission cautions that misinformation and collusion are likely to occur in attempts to manipulate these betting markets. Such actions, it warns, could severely damage the integrity of elections, especially at a time when public confidence is already low.
“The district court’s order has been construed by Kalshi and others as open season for election gambling,” the commission wrote in a brief filed over the weekend. “An explosion in election gambling on U.S. futures exchanges will harm the public interest.”
However, Kalshi previously sought federal regulations for these election bets, while some other platforms have remained unregulated.
“Other election prediction markets … are operating right now outside of any federal oversight, and are regularly cited by the press for their predictive data,” Kalshi previously argued. “So a stay would accomplish nothing for election integrity; its only effect would be to confine all election trading activity to unregulated exchanges. That would harm the public interest.”
The Commodities and Futures Trading Commission responded that Kalshi’s argument was “sophomoric.”
“A pharmacy does not get to dispense cocaine just because it is sold on the black market,” the commission wrote. “The commission determined that election gambling on U.S. futures markets is a grave threat to election integrity. That another platform is offering it without oversight from the CFTC is no justification to allow election gambling to proliferate.”
Prior to bets being halted by an appeals court, the markets on Kalshi showed that Republicans were favored to regain control of the U.S. Senate.
This article includes reporting from the Associated Press.
