The company aims to attract larger investors who may leverage it for hedging purposes and capitalize on opportunities presented by less-informed participants. However, broader adoption faces hurdles, such as the zero-sum nature of prediction markets and the need for increased liquidity to entice larger investors. [26]
Election markets proposals
2022
Kalshi's application faced delays as the CFTC closely examined whether Kalshi's contracts could effectively serve as hedges. Commissioner Caroline Pham, one of the CFTC's top two Republican officials, dissented on the decision to review Kalshi's political event contracts in August 2022. She argued that the underlying activity of the contracts, which involves political control, is not prohibited and that the agency had not established a clear test for what goes against the public interest, eliminating the need for a public interest test. In October 2022, the commission staff recommended against Kalshi's proposal to introduce higher-stakes futures contracts related to the control of Congress resulting from the midterm elections, and the CFTC delayed a decision on Kalshi's application. [27]
2023
In 2023, a monthslong legal dispute began between the Kalshi and the CFTC over political event contracts. The company maintains that its contracts serve the public interest by offering accurate election forecasting data and enabling individuals to hedge against various outcomes. In contrast, the CFTC contends that these contracts constitute illegal gambling and that it lacks the resources to oversee them effectively. Chairman Rostin Behnam has cautioned that allowing election contracts could "ultimately commoditize and degrade the integrity" of the electoral process. [28]
In June 2023, Kalshi proposed a new plan that would allow hedge funds and other major Wall Street firms to wager up to $100 million on which US political party would control Congress. Under the plan, all users could wager up to $250,000, but large trading firms could trade $50 million on the outcome of the next congressional elections, with those demonstrating an economic hedging need allowed to bet even more. [29] The CTFC opted to request a second round of public comment on Kalshi's plans. The two Republican commissioners, who were in the minority on the CFTC's board, dissented against the prolonged process, arguing that the question of whether Kalshi's products constitute prohibited "gaming" should be addressed directly through a clear rule. [30]
In September 2023, the CFTC rejected Kalshi's proposal to offer derivatives contracts on congressional control, which it deemed contrary to the public interest, citing concerns that the planned contracts would violate derivatives market regulations. The decision prohibited the listing, clearing, or trading of Kalshi's political event contracts. [31] In November, Kalshi filed a lawsuit against the CFTC over their denial of the company's bid, alleging that it had exceeded its authority in blocking their proposal. [32]
2024
On September 12, 2024, DC District Court Judge Jia Cobb rejected the CFTC's attempt to delay the company's congressional control contracts, ruling in favor of Kalshi. Cobb stated that the agency had exceeded its authority by blocking these contracts, emphasizing that Kalshi's offerings do not constitute illegal activity or gaming, as they pertain to elections. [28] The CFTC quickly appealed the judge's decision to the DC Circuit Court of Appeals, requesting an emergency stay. [33] They argued that the contracts were illegal and could potentially undermine election integrity. [28] Kalshi launched its election wagers just hours before the appellate ruling. The company warned that pausing Cobb's ruling would severely impact its operations, describing the CFTC's request as a tactic to stall their progress, while also noting the rise of the unregulated prediction market Polymarket following a recent presidential debate. [28] On October 2, 2024, a US federal appeals court denied the CFTC's request and upheld the lower court's decision, allowing Kalshi to offer political event contracts. The D.C. Circuit Court determined that the CFTC failed to demonstrate any potential harm to the public interest from Kalshi's event contracts. This ruling enabled Kalshi to offer trading ahead of the November 5 elections and may set a precedent for other firms looking to enter the prediction market space. [33] Judge Patricia Millett indicated that the CFTC could renew its request for a stay if new evidence emerges during the appeal process. [34] Politico described the ruling as a "major win for the burgeoning political betting complex in the U.S.," enabling Kalshi to offer trades on which party would control Congress, with plans to expand into other political contests, including the presidential election. [35]
2025
In July 2025, Kalshi launched prediction markets for trading on the probability of tech companies going public via IPOs by year-end. These markets reflected investor sentiment through contract prices, focusing on companies like Databricks (21%), OpenAI (5%), Klarna (72%), Stripe (6%), Brex (9%), and xAI (4%).
Kalshi relaunched its congressional control contracts on the same day, [36] allowing Americans to wager on which party will control the House and Senate in 2025. These contracts were initially introduced on September 12 after the US District Court judge rejected the CFTC's attempt to block them, but the CFTC's rapid appeal temporarily halted the offerings. [28]
In December 2025, Kalshi signed a deals with news companies CNN and CNBC to become a official prediction markets partner of this two companies. [37] [38]
Support and opposition for Kalshi's election market proposals
Kalshi claims that bringing political trading to their platform would improve oversight and accessibility, transforming a historically underground practice into a regulated financial option for retail participants. CEO Tarek Mansour has stated their platform is another form of risk management through hedging against significant economic or political changes. [39] They have argued that political event contracts not only serve the public interest by delivering accurate forecasting data but also empower users to manage financial uncertainties tied to evolving political landscapes, and have highlighted the significant activity in unregulated markets like Polymarket, which has seen over $1 billion in wagers on presidential races. [28]
Kalshi's proposals have been backed by wealthy owners and executives in commodities trading, including Vivek Ranadivé, co-owner of the Sacramento Kings, Jason Furman, a former White House economist, Intercontinental Exchange, which operates the New York Stock Exchange, as well as several former CFTC officials. [40] [41] Some market participants, including Angelo Lisboa, managing director of JPMorgan's private wealth management division, have expressed their support for Kalshi's proposals, recognizing election risk as a significant concern for their clients and noting the potential impact of bringing such capabilities to a broader population that lacks access to large banks' resources. [42]
Critics of election betting contracts argue that the contracts could threaten election integrity. [33] Consumer advocacy groups, such as D.C.-based Better Markets, express fears that such trading could turn elections into a new vehicle for day trading and further erode public trust in election results. In August 2023, in a letter to the CTFC, senators Jeff Merkley, Sheldon Whitehouse, Ed Markey, Elizabeth Warren, Chris Van Hollen and Dianne Feinstein urged the CFTC to reject Kalshi's proposal, raising concerns over electoral integrity. [43] Stephen Hall of Better Markets labeled the ruling "a sad and ominous day for election integrity" in the US following the October 2024 ruling allowing Kalshi to list contracts on election outcomes. [28]
