DC Circuit Court Grants CFTC Request to Stay Decision that Allows Betting on Elections

The US Court of Appeals for the District of Columbia Circuit ordered an administrative stay of a District Court decision to vacate a CFTC Order prohibiting a DCM from listing its congressional control contracts for trading. (See previous coverage.)

The CFTC appealed the District Court's (i) rejection of the agency's Motion to Stay and (ii) Summary Judgment Order. The Court of Appeals granted the motion to stay, effectively halting trading of elections outcome event contracts. In its appeal, the CFTC asked the Appellate Court to "stay the District Court's September 6 [Summary Judgment] and September 12, 2024 [Motion for Stay] orders and enjoin [the DCM] from offering election contracts during the pendency of the appeal."

In the Memorandum Opinion supporting its decision, the District Court reviewed the CFTC's original September 2023 determination that the proposed congressional control contracts were contrary to the public interest under the CEA's "special rule" for CFTC review of event contracts and swap contracts—CEA Section 5c(c)(5)(C) ("Common provisions applicable to registered entities") and CFTC Rule 40.11 ("Review of event contracts based upon certain excluded commodities"). The District Court concluded that "congressional control contracts involve elections ... and not illegal activities or gaming." (Emphasis added.) While the District Court acknowledged the CFTC's concern that "allowing the public to trade on the outcome of elections threatens the public interest," the Court determined that "Congress did not authorize the CFTC to conduct the public interest review conducted" in the agency's determination.

In granting the CFTC Motion, the DC Circuit Court of Appeals stated that "the purpose of this administrative stay is to give the court sufficient opportunity to consider the emergency motion for stay pending appeal."