September 12th 2024.
As soon as the judge's ruling came out overnight, people were quick to start placing bets on which political party would gain control of the US Congress in the November elections. These bets were the only ones that had been legally approved by a US jurisdiction, and they were causing quite a stir.
One New York startup company, Kalshi, wasted no time in taking advantage of the judge's decision. They began offering bets on the outcome of the November congressional elections, despite facing opposition from some who wanted to block them.
Thanks to the ruling, Kalshi was able to offer prediction contracts, also known as yes-or-no bets, on which party would end up with control of the Senate and the House in November. This was a significant moment for the company, as co-founder Tarek Mansour declared, "The Kalshi community just made history, and I know we are only getting started."
Mansour continued, "Now is finally the time to allow these markets to show the world just how powerful they are at providing signal amidst the noise, and giving us more truth about what the future holds." It was unclear, however, if Kalshi planned to extend their bets to other areas, such as the presidential race.
Additionally, it was unknown if other entities, like sportsbooks or online casinos, would follow suit and offer similar political bets after this ruling.
As the afternoon went on, the prices for Kalshi's predictive contracts fluctuated. For example, a bet on the Republicans winning control of the Senate was priced at US$0.76, meaning a US$100 bet would result in a payout of US$129. On the other hand, a bet on the Democrats claiming the House was priced at US$0.63, with a potential payout of US$154 for a US$100 bet.
The future of these bets was uncertain, as the Commodity Futures Trading Commission (CFTC) had previously prohibited Kalshi from offering them and planned to appeal the ruling.
Not everyone was on board with the idea of betting on elections. Better Markets, a non-profit organization advocating for the public interest in financial markets, called the move "a dangerous move that opens the floodgates to unprecedented gambling on US elections, eroding public trust in both markets and democracy."
During the hearing, Kalshi's attorney, Roth, argued that the company had followed regulations and invested heavily in these markets. He stated, "It would be perverse if all that investment went up in smoke."
On the other hand, the CFTC's attorney, Raagnee Beri, expressed concerns that allowing these bets could lead to malicious activities aimed at influencing election outcomes and undermining public confidence in the voting process. She compared it to someone spreading false information about a drought to manipulate the market for corn commodities.
Despite the CFTC's plans to appeal the ruling, the judge declined to issue a stay, which meant Kalshi could continue offering election bets for the time being.
Currently, Kalshi already offers yes-no positions on various political topics, such as the likelihood of a government shutdown, the confirmation of a new Supreme Court justice, and President Joe Biden's approval rating by the end of the year.
While Kalshi may have been the first to legally offer election bets, they were not the first in the US. West Virginia briefly allowed such bets in April 2020 before reversing their decision due to a lack of research.
For those struggling with gambling, there are resources available, such as the National Gambling Helpline and online counseling. Help services and support for family and friends are also accessible. Additionally, Gamblers Anonymous offers assistance for those looking to talk to someone about their gambling. These services are free, confidential, and available 24/7.
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