- The CFTC investigates Kalshi over alleged failures to notify the agency about dozens of proposed contracts under development.
- Kalshi describes the issue as a procedural filing error, saying many affected contracts never went live.
- Regulatory scrutiny also extends to Polymarket’s compliance with a 2022 CFTC settlement restricting US user access.
Kalshi faces potential enforcement charges from the U.S. Commodity Futures Trading Commission over alleged failures to report dozens of proposed contracts. According to POLITICO, the months-long investigation examines the platform’s self-certification process. The warning comes as Democrats prepare stronger oversight of prediction markets following their midterm election gains.
CFTC Investigation Focuses on Kalshi Contract Filings
The CFTC is examining whether Kalshi properly notified the agency about dozens of contracts under development. A person familiar with the investigation told POLITICO that enforcement charges could arrive soon. However, the matter could also end in a settlement.
Kalshi spokesperson Elisabeth Diana described the issue as a procedural filing error involving a handful of contracts. She said many affected contracts never went live and confirmed the company was addressing the matter.
The investigation has focused on self-certification, which allows regulated exchanges to introduce contracts without explicit CFTC approval. Under this process, exchanges can launch products as soon as the following day. However, operators must certify compliance with agency requirements, including protections against market manipulation.
Democrats Prepare Greater Oversight of Prediction Markets
The investigation comes as Democrats prepare to increase scrutiny of prediction markets in the next Congress. Their plans follow gains in the November midterm elections.
Meanwhile, the Michael Selig-led CFTC is also investigating Polymarket. The agency is examining whether the platform violated its 2022 settlement agreement restricting access by U.S. users.
Kalshi and Polymarket have expanded their operations under a more accommodating regulatory approach. POLITICO reported their respective valuations at $40 billion and $21 billion.
Self-Certification Process Draws Industry Attention
The CFTC’s review also concerns broader questions surrounding self-certification. The process allows exchanges to introduce products without waiting for explicit regulatory approval.
However, CME Group CEO Terry Duffy previously criticized prediction market contracts over manipulation risks. He argued that certain wagers should not have received approval for trading.
In July, the CFTC also warned prediction market operators against using overly broad language when certifying new products. The agency’s latest scrutiny now includes Kalshi’s contract submissions and Polymarket’s settlement compliance.
