NEW YORK, Sept 12 (Reuters) - A federal judge on

Thursday cleared the path for Americans to use derivatives to

bet on events such as the outcome of U.S. elections, dealing

another blow to the regulator overseeing the market.

Predictions marketplace KalshiEX LLC sought to list

contracts that would let users bet on whether a particular party

will control the House of Representatives and Senate in a given

term.

But the U.S. Commodity Futures Trading Commission prohibited

Kalshi from listing and clearing its cash-settled political

event contracts due to concerns about unlawful gaming and other

activities not in the public's interest.

Kalshi later sued, saying the CFTC exceeded its authority.

In her opinion released Thursday just weeks ahead of the

Nov. 5 presidential and congressional elections, District Court

Judge Jia Cobb wrote that Kalshi's contracts don't involve

unlawful activity or gaming, rather elections which are neither.

"This case is not about whether the Court likes Kalshi's

product or thinks trading it is a good idea," Cobb stated. "The

Court's only task is to determine what Congress did, not what it

could do or should do. And Congress did not authorize the CFTC

to conduct the public interest review it conducted here."

The CFTC did not immediately respond to a request for

comment.

Kalshi CEO and co-founder Tarek Mansour told Reuters in a

written statement, "Now is finally the time to allow these

markets to show the world just how powerful they are at

providing signal amidst the noise and giving us more truth about

what the future holds."

Following the court's decision, Cantrell Dumas, director of

derivatives policy at Better Markets, a nonprofit promoting

public interest in financial markets, said the ruling

prioritizes corporate profit over public interest.

"Allowing Kalshi's political event contracts is a dangerous

move that opens the floodgates to unprecedented gambling on U.S.

elections, eroding public trust in both markets and democracy,"

said Dumas.