investors’ opinions about a specific yes-or-no question and it covers a huge and diverse array of these options. Kalshi lets users trade on the outcome of events such as the price of petrol, the rise of Covid variants, global GDP growth, inflation in China, moon landings and the weather.
Kalshi now wants to offer option contracts on Congressional election results in American politics and has been engaging with the Commission to list these contracts for over a year.
In August 2022, the CFTC announced that it was seeking public comment on Kalshi’s proposed contracts. Kalshi’s could sue the CFTC if they don’t give it the green light to do so, arguing that proposed contracts “would ensure that this activity is brought to a regulated US exchange, with the benefits of increased market integrity, consumers, and real liquidity.” Te company also argued via a blog post in August 2022 that nothing has an affect greater than on how Americans live their lives than elections and there is no regulated financial product that allows Americans “to hedge against these economic consequences or get a true signal on what policy direction the country is most likely heading.”
P70 WIRE / PULSE / INSIGHT / REPORTS
MORE SKIN IN THE GAME
In 2020, small-scale prediction markets were one of the few remaining places where people from different political walks of life
interacted with each other regarding politics, and it helped to moderate right- wing extremist beliefs about the inevitability of
Trump’s re-election. The next few months will be a crucial time for the betting on
outcomes of election results and much will depend on the
CFTC’s decision. For now it’s a tough call to predict the future of this market.
Prediction markets are used to forecast a wide variety of events. Tose concerning elections can be controversial over arguably outdated fears that it can lead to bribery and election rigging. Te reality is that they are good sources for information, provide an excellent research tool, can be more accurate than polls and provide a less biased insight into politics than mainstream media.
Tey have other advantages too. With money on the line those taking part in trading election market futures pay more attention to the inner workings of the political system and therefore become more invested.
According to IEM over 100 universities throughout the world have enrolled in the IEM programme a lot of them for research purposes. At the same time students can earn a real monetary reward and as such are more “more willing to learn.”
Tis opinion was reflected in a letter recently sent to the CFTC by Republican Ritchie Torres a representative for New York's 15th congressional district along with five other self described "policymakers, activists,
journalists, pollsters and grassroots organisers." Tey warned that should the CFTC prohibit political prediction markets then it would undermine election integrity as prediction markets acted as a counterbalance to echo chambers and polarisation. Banning these markets, would only push this activity onto offshore, unregulated platforms they argued.
“Real-world data repeatedly emphasises the superior forecasting accuracy of prediction markets to polls and pundits. Because traders have financial skin in the game, their principal incentive is to predict accurately, instead of merely supporting a partisan line.
“In 2020, small-scale prediction markets were one of the few remaining places where people from different political walks of life interacted with each other regarding politics, and it helped to moderate right-wing extremist beliefs about the inevitability of Trump’s re-election.”
Te next few months will be a crucial time for the betting on outcomes of election results and much will depend on the CFTC’s decision. For now it’s a tough call to predict the future of this unique and engaging prediction market.
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