🗳️ Election betting’s win

Post-debate bets… are now table stakes. A federal judge sided with a New York prediction market that had been fighting regulators over election-related bets in the US. Kalshi, which is regulated by the Commodity Futures Trading Commission, got the green light to list bets on congressional elections. Prediction markets like Kalshi let users wager on real-world events, from the size of Fed rate cuts to whether Justin Bieber will release a new song this year.

• Jackpot: Kalshi celebrated its win over the CFTC. “Election markets are now legal in the US for the first time in 100 years,” it said, adding that election bets were coming soon.

• The house still wants to win: The CFTC sought, and the court granted, a pause on the ruling until a hearing set for tomorrow.

A crowded table… The prediction markets industry is booming, with PredictIt and crypto-based Polymarket overseeing hundreds of millions of dollars in bets. Polymarket, which bars folks in the US from using its service, saw half a billion dollars in trading last month alone. As of yesterday, Polymarket had $850M+ wagered on who’ll win the US presidential election. Before last night’s debate, people could buy events contracts on everything from whether Donald Trump would say “bitcoin” to whether VP Kamala Harris and Trump would shake hands (bettors gave a 27% chance).

Out of the vault… The Fed’s reversing course on plans to hike banks’ reserve requirements by 20%. Now it plans to raise the amount of cash banks need to have on hand by just 9%. FYI: banks are required to hold a certain amount of cash in vaults to handle a rush of customer withdrawals. Most US banks with less than $250B in assets (aka all except the biggest) won’t be required to hike their reserves if the rule’s adopted.

• Regulators say boosting reserves will better prepare the US to handle financial crises like bank runs. On the flip side…

• Banks say if they’re forced to hold too much cash in reserves, they’ll have less $$ to lend to Americans and small businesses, which could stifle economic activity (more $$ sitting idle = less $$ moving around the economy).

Take it to the bank… The Fed’s concession is considered a big win for Wall Street, which has been fighting against the hike since it was proposed last summer after the collapse of Silicon Valley Bank, Signature Bank, and First Republic. Bank execs led by JPMorgan Chase CEO Jamie Dimon have rallied against the higher-reserve requirement and earlier this year threatened to sue the Fed. Wall Street lobbyists ran TV and billboard ads, warning consumers that it would hurt their ability to get loans like mortgages.