With the U.S. presidential election less than two weeks away, the bets are flooding in on former President Donald Trump versus Vice President Kamala Harris. In response, the Commodity Futures Trading Commission (CFTC) is taking on the unofficial role of "elections cop,” as announced by agency chairman Rostin Benham during a recent interview with Bloomberg Television.
A court ruling last month gave prediction market Kalshi the green light to proceed with its political prediction-market contracts, lifting a ban by the CFTC and making it the first federally regulated exchange in the U.S. to allow trades on the outcome of any event.
“A district court in D.C. made a decision just over a month ago, and we did appeal to the court of appeals for a stay on the actual contracts. Both were denied. We respect those decisions and we will regulate those markets as best we can,” Benham explained during the interview.
In light of the court’s decision, Benham stressed that the CFTC is committed to overseeing political derivative markets, despite its ongoing efforts to shut down the sites.
“We will do the job,” he said. “We will monitor markets. We will take tips or any information we get from the general public and will pursue any action as we do in any part of our markets.”
Ongoing legal battle with Kalshi
The CFTC continues in its court fight against Kalshi Inc., a New York-based exchange that lets Americans bet on election outcomes. The agency is appealing the court’s decision, citing concerns over potential harm to the public interest. Additionally, the agency raised concerns that the judge’s ruling potentially opens the door for other trading platforms to offer election bets.
“While we have this ongoing legal challenge, we will allow them, and we’re going to do what we can to protect the integrity of the markets,” commented Benham, adding that “The commission has actually been pretty consistent for the better part of a decade that we don’t believe listing event contracts on political elections is legal.”
However, Kalshi argues that prediction markets help combat misinformation, as good traders tend to fact-check before buying or selling, making them a powerful tool for exposing the truth.
“Americans should be allowed to trade on elections because electoral outcomes are extremely valuable information to know, and markets are the most efficient mechanism to aggregate information,” said Jack Such, a spokesperson for Kalshi.
Kalshi has reported a surge in trading activity this week, with some users placing trades worth more than $20,000 on the presidential election outcome.
“Demand for Kalshi has exploded recently,” commented Such. “It’s not uncommon for almost half of all trading volume to happen in the days running up to the election.”
Polymarket cracks down on U.S. users
Meanwhile, the unregulated, crypto-based platform Polymarket is conducting additional checks to ensure spenders are based outside of the U.S. after seeing a surge in pro-Trump bets. An account sparked concern by making huge bets on Donald Trump's US election betting odds, helping push the total potential payout for a Trump victory from $30 million on Friday to nearly $43 million by Monday morning.
On Polymarket, Trump's odds of winning are now at 63%, compared to Harris at 37%. This sharp difference from recent opinion polls, which show a tight race, has many wondering whether these large bets are impacting the market or if Polymarket simply reflects better insights into voter sentiment.
