The U.S. Commodity Futures Trading Commission (CFTC) has decided to drop its appeal in the case against Kalshi, a New York-based prediction market, as per a recent court filing. This move paves the way for the platform to offer political event contracts without any legal obstacles.

According to the terms outlined in the motion for voluntary dismissal, both parties will cover their respective legal costs and Kalshi agrees to forgo any potential lawsuits against the CFTC related to the litigation.

In a statement, Kalshi CEO Tarek Mansour expressed his elation at the outcome, stating, “Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off. This result is proof of that. Kalshi’s approach has officially and definitively secured the future of prediction markets in America.”

The conflict between Kalshi and the CFTC began in 2023 when the regulator rejected Kalshi’s proposal to allow users to bet on which party would control the chambers of Congress. The CFTC, led by former Chair Rostin Behnam at that time, cited concerns that such contracts constituted unlawful gaming and were not in the public interest.

Following the denial, Kalshi took legal action against the CFTC in Washington, D.C., challenging the regulator’s authority in blocking the contracts and requesting the decision to be overturned. In September 2024, the court ruled in favor of Kalshi, giving the platform the green light to proceed with listing the political contracts.

After losing the case, the CFTC attempted to delay Kalshi’s listing of the contracts with a 14-day stay and later filed an appeal reiterating their original arguments. However, with a change in leadership and strategic advisory additions in Kalshi, the CFTC eventually dropped the appeal.

Under the guidance of acting Chair Caroline Pham, the CFTC has shifted its approach towards cryptocurrencies, simplifying its regulation and enforcement efforts within the industry.