CFTC starts review of Kalshi’s Congressional Control Prediction Markets.

The U.S. Commodity Futures Trading Commission has begun a formal review and public comment period to evaluate Kalshi’s proposed contracts for betting on who will control Congress after the next election. The CFTC will need to make a decision at the end of the 90-day review period, or try to extend it. The CFTC has also announced a 30-day public comment period to seek input on 24 different questions about the contracts, including whether they are “similar to gaming” as defined by CFTC rules, whether the proposed betting is unlawful, and how they compare to previous efforts.

Last week, the CFTC announced a public meeting set to take place on June 26th, which was intended to let the regulator decide whether to commence its review. However, another press release on Friday announced that the meeting was canceled.

Kalshi hinted last year that the CFTC would approve its political event contracts in the run-up to the 2022 midterm elections in the U.S., though staff later recommended rejecting the contracts. Kalshi later withdrew its proposal before refiling in an effort to address regulator concerns.

CFTC Commissioners Summer Mersinger and Caroline Pham both dissented from the decision to launch a new review period on Friday. Mersinger argued that Kalshi had been operating in good faith to address the regulator’s concerns, and launching another comment period would delay any resolution. Moreover, Kalshi’s self-certified contracts do not fall into any definition of “gaming” for the CFTC’s purposes, Mersinger said.

Pham’s dissent pointed to an appeals court ruling on another prediction market, PredictIt, which the CFTC ordered shut down last year. If the CFTC were to try and suspend Kalshi’s political event contracts, that might violate the appeals court order, Pham said.