The Commodity Futures Trading Commission is investigating whether Kalshi, a major prediction market platform, failed to properly notify the agency about dozens of new products, according to a source familiar with the matter. Kalshi said the CFTC’s warning concerns a procedural error involving the submission of a handful of contracts, many of which were not live. The agency’s private notification to Kalshi suggests that formal charges could be brought soon.
Prediction markets, including Kalshi and Polymarket, have grown rapidly, with valuations of $40 billion and $21 billion respectively. Their expansion has been supported by the CFTC’s previously more permissive stance. However, the current probe signals a shift in regulatory approach, with the agency now increasing scrutiny of these platforms. The CFTC is also investigating Polymarket for compliance with a 2022 settlement restricting access for US users.
A key issue is the self-certification process, which allows exchanges to quickly launch new products by attesting to compliance with CFTC rules. This process has drawn criticism from established market players concerned about manipulation risks. In July, the CFTC warned operators against using overly broad language when certifying products.
Senior executives in regulated markets should watch for further action from the CFTC and review their own compliance processes for new product launches.
