239:. PredictIt operates as a nonprofit research project, restricting the number of traders to 5,000 per event and capping trade sizes at $ 850 per person per question. In contrast, Kalshi operates as a designated contract market and allows users to invest up to $ 25,000 on a single contract (and up to $ 7 million on certain contracts). Additionally, Kalshi does not currently offer markets related to elections.
309:
need allowed to bet even more. 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.
332:, 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. Better Markets' CEO, Dennis Kelleher, has even mentioned the possibility of filing a lawsuit if the CFTC approves the Kalshi proposal. In August, in a letter to the CTFC, senators
316:
Kalshi has asserted that introducing political trading on their platform would enhance oversight and protection compared to existing options, potentially making political trading markets more accessible to a broader audience. They highlight the long-standing interest in election trading in the United
312:
In
September 2023, the CFTC rejected Kalshi's proposal to offer derivatives contracts for betting on congressional control. The CFTC deemed the proposal contrary to the public interest, citing concerns that the planned contracts would violate derivatives market regulations. The decision prohibits the
222:
to take positions on the platform. As of April 2023, the bet limit allowed on the platform is $ 25,000, although certain contracts allow a maximum wager of $ 7 million. Users are prohibited from wagering more than the amount they have deposited. Kalshi charges transaction fees per trade but does
313:
listing, clearing, or trading of Kalshi's political event contracts. In
November, the company filed a lawsuit against the CFTC over their denial of the company's bid. The lawsuit alleges that the CFTC exceeded its authority in blocking Kalshi's proposal to allow betting on the control of Congress.
308:
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
271:
Kalshi faces challenges in dealing with questions that have continuous answers and providing clear results to a large user base. The company aims to attract larger investors who may leverage it for hedging purposes and capitalize on opportunities presented by less-informed participants. However,
317:
States, which has traditionally existed in an underground manner. The executives state that they aim to change this by bringing political trading into the open, making it accessible to everyday
Americans who face election-related risks, such as the impact of Congress' composition on issues like
296:
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
213:
Trading is based on opinions about specific yes-or-no questions. Users pick a side and price (1 cent to 99 cents), and when the opposing yes and no sides total $ 1 per contract, a trade occurs. Whichever side turns out to be correct keeps the full $ 1. The contract price reflects the market's
263:
to include its platform in their listings and with other investment firms to act as market makers on the exchange. Orders on Kalshi remain on the books until a second trader is willing to take the opposing side of the contract, potentially resulting in lower volumes and
149:. The founders note that the absence of a direct safeguard against unfavorable outcomes was what prompted them to envision a platform that would allow investors to engage in wagers on future events, providing a means to hedge uncertainties and capitalize on insights.
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division, have expressed their support for Kalshi's proposal, 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.
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Kalshi does not offer markets related to elections. Co-founder Luana Lopes Lara stated that the exchange focuses on events inspired by current headlines, as exemplified by the introduction of markets related to U.S. Supreme Court cases in
December 2021.
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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
140:
Founded in 2018, Kalshi was established by Tarek
Mansour and Luana Lopes Lara. The idea for the company emerged during their tenure as financial analysts, where they identified challenges faced by investors attempting to
156:(CFTC) on 3 November 2020, registering as a designated contract market. Kalshi's case was strengthened by the presence of several prediction markets that operated without seeking regulatory approval, such as
280:
Kalshi has faced regulatory challenges in its efforts to create markets regarding political control of
Congress. The company has sought approval from the CFTC to introduce election contracts resembling
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251:(SEC), its current offerings are limited enough that it is expected to operate under the regulations of the Commodity Futures Trading Commission (CFTC) alone. Matthew Kluchenek, a partner at
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or futures. These contracts are "cash-settled, binary contracts" based on questions such as which political party will control a specific chamber of
Congress.
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As a trading exchange, Kalshi allows both retail and institutional traders to place trades on various future events, spanning topics like weather and
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broader adoption faces hurdles, such as the zero-sum nature of prediction markets and the need for increased liquidity to entice larger investors.
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Kalshi's application faced delays as the CFTC closely examined whether Kalshi's contracts could effectively serve as hedges. Commissioner
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and argue that by offering these tools, individuals would be empowered to financially hedge against various aspects of their lives.
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offering event contracts. The platform was launched in July 2021. Kalshi has been described as a potential "new competitor for
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of an event happening. The exchange provides contracts that payout $ 1 for correct selections. Traders are not allowed to use
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375:, as well as several former CFTC officials. Some market participants, including Angelo Lisboa, managing director of
268:. The company has an affiliate called Kalshi Trading, which trades and provides liquidity for many of its contracts.
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In January 2023, Kalshi experienced a workforce reduction of approximately 25%, resulting from a combination of
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622:"Could Gambling on Elections Be 'Bigger Than Sports Betting'? A Trading Startup Shoots Its Shot"
562:"Tarek Mansour, 25, Cofounder & CEO, Kalshi – 2021-12-01 – 2022 30 Under 30: The Standouts"
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974:"This new exchange lets investors vote yes or no on major events to hedge their portfolios"
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483:"From Fintech's Top Founders To Wall Street's Best Dealmakers: 30 Under 30 Finance 2022"
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urged the CFTC to reject Kalshi's proposal, raising concerns over electoral integrity.
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Kalshi's proposal is backed by prominent figures in the financial industry, including
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In June 2023, Kalshi proposed a new plan that would allow hedge funds and other major
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After attempting for 18 months, Mansour and Lara obtained a federal license from the
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1074:"CFTC rejects derivatives contracts 'gambling' on US congressional control"
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Kumparak, Josh Constine, Kate Clark, Lucas Matney and Greg (2019-03-19).
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999:"The White House's $ 65 billion pandemic preparedness plan falls short"
592:"Kalshi, An MIT Betting Startup, Is Allowing People To Bet On Anything"
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1222:"'Gambling on democracy': US regulators weigh election futures market"
260:
171:
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652:"The Startup That Lets Hedge Funds Bet Millions on Real-Life Events"
1197:"Political betting: Is it a 'gambling den' or 'better than polls'?"
1023:"Hedge Funds Could Bet $ 100 Million on US Election in Kalshi Plan"
901:"Betting on Elections Can Tell Us a Lot. Why Is It Mostly Illegal?"
512:"A New Prediction Market Lets Investors Bet Big on Almost Anything"
427:"The Feds shut down the internet's most popular prediction market"
1146:"Is the U.S. Ready for Election Betting? We're About to Find Out"
1094:"POLITICO Pro: Kalshi sues CFTC over election betting bid denial"
132:", though Kalshi does not currently oversee election contracts.
705:"Here are the 85+ startups that launched at YC's W19 Demo Day 1"
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869:"What the Markets Are Saying About the Risk of a Debt Default"
819:"This site lets investors bet on Lil Nas X and climate change"
1119:"Washington weighs plan to let Americans wager on elections"
301:, and the CFTC delayed a decision on Kalshi's application.
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Support and opposition for Kalshi election market proposals
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prices in other markets. Kalshi has engaged in talks with
791:"Wanna Place a Bet on Whether Gov Ball Will Be Canceled?"
747:"Prediction Markets Failed The Midterm (Election) Exams"
538:"By The Numbers: Meet The Forbes Under 30 Class Of 2022"
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likelihood, and the potential for the United States to
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and Augur. The name "Kalshi" signifies "everything" in
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Financial services companies based in New York City
770:Goldstein, Jacob; Woods, Darian (August 16, 2022).
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1277:Financial services companies established in 2018
1047:Harty, Declan; Warmbrodt, Zachary (2023-06-30).
247:Although Kalshi lacks formal standing with the
1170:Sutton, Sam; Warmbrodt, Zachary (2023-08-02).
936:"Will prediction markets live up to the hype?"
202:. The platform also covers markets related to
223:not rely on traders' losses for its revenue.
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1172:"The downgrade: Does it matter?"
620:Scola, Nancy (4 November 2022).
167:Kalshi launched in July 2021.
772:"A market to bet on the future"
1049:"A political betting revival?"
997:Lutter, Randall (2021-09-16).
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789:Millman, Ethan (2021-09-15).
1282:Electronic trading platforms
1195:Harty, Declan (2022-10-28).
1117:Harty, Declan (2022-09-05).
842:Frick, Walter (2022-04-13).
650:Beyoud, Lydia (2023-04-20).
292:, one of the CFTC's top two
204:presidential approval rating
174:and voluntary resignations.
972:Pound, Jesse (2021-12-29).
867:Sommer, Jeff (2023-05-19).
675:Stern, Jacob (2022-11-14).
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1098:subscriber.politicopro.com
899:Funt, Danny (2022-11-03).
276:Election markets proposals
227:Comparisons with PredictIt
48:; 6 years ago
369:Intercontinental Exchange
844:"Is a recession coming?"
330:Consumer advocacy groups
677:"PredictIt Already Won"
373:New York Stock Exchange
1287:Derivatives (finance)
371:, which operates the
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536:Wilson, Alexandra.
38:Event-based trading
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338:Sheldon Whitehouse
243:Regulatory history
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253:Mayer Brown
216:probability
122:Kalshi Inc.
20:Kalshi Inc.
1246:Categories
1231:2023-07-29
1206:2023-08-24
1181:2023-08-10
1156:2023-07-29
1128:2023-07-27
1103:2024-02-14
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709:TechCrunch
686:2023-07-29
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410:References
319:tax policy
294:Republican
257:securities
214:estimated
158:Polymarket
136:Foundation
80:Key people
948:0013-0613
913:0028-792X
404:CME Group
342:Ed Markey
266:liquidity
233:PredictIt
196:recession
130:PredictIt
1201:POLITICO
1176:POLITICO
1123:POLITICO
1053:POLITICO
1003:The Hill
723:cite web
455:"Kalshi"
394:iPredict
388:See also
377:JPMorgan
194:uptake,
65:New York
35:Industry
1150:Gizmodo
1079:Reuters
823:Fortune
399:Intrade
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