Political market provider Kalshi urges regulators to allow political betting in America. [Image: Shutterstock.com]
A group of Washington hitters is urging regulators to legitimize US political bets in races such as the upcoming midterm elections and the quadrennial presidential election.
Insiders, entrepreneurs, and economists are among those who make up the group. They are asking the Commodity Futures Trading Commission (CFTC) to sign and implement a plan from forecast market provider Kalshi, which would allow for political betting in multiple aspects.
Fears that passing such measures would turn important political battles into a mere gambling game
The Commodity Futures Trading Commission is studying the proposal this week. There have long been concerns that passing such measures would turn important political battles into simple gambling races. Kalshi is ready to fight for change, if necessary.
American political bet on the list?
Political betting has a strong history in other countries despite it still being a niche market in America. For example, UK sportsbooks offered odds on when former Prime Minister Liz Truss would step down – the answer was just 45 days after her first day.
While US groups aim to move towards this model, Kalshi believes that the US regulator does not have the power to constrain political gambling.
“The law is very clear,” said Tarek Mansour, co-founder and CEO of Kalashi. “It would be illegal to close these markets.”
Many of the political bets that people make in the United States are placed with outside and unregulated sportsbooks, which most states try to weed out. These sites are often unregulated and offer no protection to consumers, exposing them to the potential for fraud and other criminal acts. Betting Exchange PredictIt, which is similar to Kalshi, has been gaining popularity in recent years, although it may be on its way out.
The CFTC has an inherent responsibility to pursue “responsible innovation”
Kalshi believes that the CFTC has an inherent responsibility to pursue “responsible innovation,” which means adding political gambling to the betting market. Market traders can already bet on aspects of the economy such as gas prices and the inflation index.
The proposal was met with great support from influential businessmen. Intercontinental Exchange, which owns NYSE, has said Kalshi’s bid is not gambling, while Sacramento Kings co-owner Vivek Ranadivé has also expressed support.
precedent in combat
The position pushed by Kalchi is not without support or merit. Former Obama White House economist Jason Furman said he and other teams have used political forecasting markets to assess the implications of future decisions.
“They have a very good record of being better than the polls and better than political geniuses,” Forman said. “It’s a much purer way for people in business, government and interested parties to understand what might happen.”
Fears that political markets could become a new hub for day traders
However, there are concerns that political markets could become a new hub for day traders. The timing is also questionable, given the strained relations between the parties and the strained relationship between youth and the establishment.
Former President Donald Trump also perpetuated the misconception that the election was rigged with constant calls for a recount and suggestions that he would refuse to leave office if he lost (and continues to spread the “Big Lie” on a daily basis). As a result, Better Markets CEO Dennis Keeler said the political bet could “raise more questions about our elections and our democracy.”
In 2012, the CFTC rejected an application by another company to regulate betting on political events on the grounds that it was not in the public’s interest and constituted gambling. However, Kalshi’s advisors believe the CFTC misinterpreted the laws.
“[Creating political betting] It might make some people uncomfortable, but that’s not the basis for failing to follow the law and regulations,” said Jeff Bandman, a former CFTC with Kalshi.