“Establishing a large-scale, for-profit political event betting market in the United States by approving Kalshi’ s requested contracts would profoundly undermine the sanctity and democratic value of elections,” Mr. Merkley wrote in a letter to the commission. He was joined by fellow Democratic Senators Chris Van Hollen of Maryland, Sheldon Whitehouse of Rhode Island, Dianne Feinstein of California and Elizabeth Warren and Edward J. Markey of Massachusetts. They added that “introducing financial incentives into the elections process fundamentally changes the motivations behind each vote, potentially replacing political convictions with financial calculations.”
The proposal has also encountered stiff opposition from Better Markets, an independent Wall Street and consumer watchdog that characterizes Kalshi’s proposal as a “back door” effort to instigate across-the-board wagering on U.S. elections when state and federal regulators have historically banned such gambling.
“If it were to be approved by the C.F.T.C. or the courts, you can bet there will be widespread gambling on everything from the presidency to the local dogcatcher,” said Dennis Kelleher, a former top Senate aide who heads Better Markets. “We are at a perilous point in politics where confidence and trust in elections is low and going lower. The last thing democracy can withstand now is additional activities that erode the confidence of Americans.”
Kalshi initially tried to win approval for its plan before the 2022 midterm elections but withdrew its proposal when it appeared in danger of being blocked. It resubmitted a revised plan in early June. The C.F.T.C. then began a 90-day review period over the objection of one commissioner, who argued Kalshi should be allowed to proceed. Should the agency rule against the trading plan, a lawsuit challenging that outcome is anticipated.
Under the proposal, members of Congress, candidates for federal and statewide office, top advisers and others with a direct role in campaigns would be prohibited from taking part.