(Bloomberg) -- The top US derivatives regulator has given the thumbs down to Kalshi Inc.’s plan to offer bets on US congressional elections.

Kalshi lets traders wager $25,000 on everything from monthly interest rate hikes to the timing of the next moon landing. Its latest proposal in June could have allowed hedge funds and other Wall Street firms to bet as much as $100 million on which political party would control the House or Senate. 

The firm’s bid involves gaming that violates state laws, and such contracts are “contrary to the public interest,” the Commodity Futures Trading Commission said Friday. The CFTC oversees Kalshi, which is registered as a derivatives exchange with the agency.

CFTC Chairman Rostin Behnam said he was concerned that the plan could thrust the agency into the business of policing elections.  

“It makes sense for the CFTC to have authority to combat fraud, manipulation, and false reporting in underlying commodity markets,” Behnam said in a statement. “But it is impractical for the CFTC to combat them in the underlying market here —— a political contest.  The implications of such authority are vast, and could extend in a multitude of directions beyond the election itself, political fundraising and polling, to name just two.”

Read More: Hedge Funds Could Bet $100 Million on US Election in Kalshi Plan

Kalshi’s chief executive officer, Tarek Mansour, said the company is still hopeful despite the CFTC’s decision. 

“We know that what Kalshi is embarking on is bold and transformative,” he said in a statement. “We have faith in the market and fundamentally disagree with today’s decision. However, we remain optimistic and believe that with time, our vision will be recognized and embraced.”

The CFTC didn’t approve an earlier proposal from Kalshi to offer the contracts before the 2022 elections.

In event contracts like the ones that Kalshi offers, prices settle at either $1 if the event happens, or zero if not and the price fluctuates before then, depending on how likely the market considers the occurrence. It also recently sought to entice professional traders to its platform by raising the stakes on its monthly inflation rate contract to $7 million. 

--With assistance from Lydia Beyoud.

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