119 F.4th 58
D.C. Cir.2024Background
- KalshiEx LLC is a regulated commodities exchange seeking to offer "Congressional Control Contracts," which allow bets on which party will control Congress after the 2024 elections.
- The Commodity Futures Trading Commission (CFTC) prohibited Kalshi from offering these contracts, arguing they constitute illegal gaming or election gambling under state laws and are contrary to the public interest.
- Kalshi challenged the CFTC’s prohibition in federal district court under the Administrative Procedure Act, arguing the CFTC misapplied terms like "gaming" and "unlawful activity."
- The district court ruled for Kalshi, holding the CFTC misinterpreted the relevant law and vacated the Commission’s order.
- The CFTC sought a stay of the district court judgment pending appeal, arguing potential irreparable harm to election integrity and public trust if trading is allowed.
- The D.C. Circuit denied the CFTC’s stay motion, finding no concrete evidence of likely irreparable harm at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Congressional Control Contracts are "gaming" under the CEA Special Rule | Kalshi: "Gaming" means playing a game; elections aren’t games, so contracts don’t qualify as gaming. | CFTC: "Gaming" includes betting on elections, so contracts are gaming. | Not gaming; elections not a "game" under the statute. |
| Whether contracts involve unlawful activity under state law | Kalshi: Contracts' underlying events (elections) are not unlawful, so contracts do not involve illegal activity. | CFTC: Many states prohibit betting on elections, so contracts involve unlawful activity. | Not unlawful; underlying events (elections) aren't illegal. |
| Whether CFTC showed irreparable harm if stay is denied | Kalshi: No concrete evidence that trading will harm public or election integrity. | CFTC: Trading could incentivize voter misconduct and misinformation, harming elections. | No irreparable harm shown at this time. |
| Whether public interest supports a stay | Kalshi: No demonstrated harm; stay would unjustly block lawful contracts. | CFTC: Allowing trading could erode trust in elections. | No stay; public interest not clearly harmed. |
Key Cases Cited
- Citizens for Responsibility & Ethics in Washington v. Federal Election Commission, 904 F.3d 1014 (D.C. Cir. 2018) (sets standard for preliminary injunctions and irreparable harm)
- Nken v. Holder, 556 U.S. 418 (2009) (outlines the four factors required for a stay pending appeal)
- Wisconsin Gas Co. v. FERC, 758 F.2d 669 (D.C. Cir. 1985) (explains that irreparable harm must be actual, not speculative)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (requires a showing of irreparable harm for injunctive relief)