Political prediction exchange Kalshi reopened its 2024 general election markets this morning following a favorable court decision. Those markets now include contracts on the outcome of the Presidential race, and speculators appear to see it as a coin flip between former President Donald Trump and current Vice President Kamala Harris.
The market opened at 8:15 a.m. ET on Oct. 4. An hour and a half later, shares for both candidates were selling at 50 cents apiece. That implied a consensus belief that Trump and Harris are each equally likely to win. However, as of 11 a.m., Harris has pulled ahead, albeit only by a couple of percentage points.
Other markets include the races for each chamber of the federal government. Kalshi users see the Senate as 73% likely to go to the Republicans. However, the House of Representatives seems to be leaning the other way, with contract prices implying a 63% chance of a Democrat win there.
Harris remains a small favorite on PredictIt, which has been offering election contracts for longer. Yes shares for her presidency have consistently fluctuated between 50 and 60 cents on that exchange since current President Joe Biden dropped out of the race, save for a brief period of volatility immediately after the news broke.
Kalshi-CFTC Battle Will Wait Until After the Election
Both Kalshi and PredictIt are facing pushback from the Commodity Futures Trading Commission (CFTC). Technically speaking, they are futures exchanges, not betting sites, which puts them within the CFTC’s jurisdiction.
From 2014 until 2022, PredictIt operated under the blessing of a “no-action letter” from the CFTC. It was able to skirt the issue of the legality of its contracts because of this promise by the CFTC not to try to shut it down, so long as it operated on a small scale for academic research purposes.
In 2022, the CFTC decided that PredictIt’s operations had exceeded the scope of what the Commission had intended, so it withdrew the letter. That prompted a lawsuit by PredictIt and Aristotle International, the commercial entity operating it on behalf of Victoria University. That case is still playing out, but the Fifth Circuit has prevented the CFTC from shutting PredictIt down in the meantime.
This week, Kalshi won a similar reprieve. The CFTC has proposed a change to its rules that would formally exclude election results from the range of acceptable contracts. However, the process to change the rules is slow, and those new rules haven’t yet come into effect.
The US District Court for the District of Columbia denied the CFTC’s motion for a stay pending appeal, which would have kept Kalshi offline until after the election. The court found that the CFTC hadn’t adequately demonstrated that Kalshi’s markets might jeopardize the integrity of the election. However, it made its ruling without prejudice, meaning that it has reserved the right to revisit the issue if evidence emerges that the market is causing the sort of harm the CFTC alleges it will.
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