Kalshi’s $40 billion prediction-market empire draws a CFTC probe over contract filings

The U.S. Commodity Futures Trading Commission has privately warned prediction market operator Kalshi that enforcement charges could follow an investigation into whether the company properly notified the agency about dozens of new products, Politico reported Tuesday. The inquiry has reportedly run for months, according to a person with direct knowledge of the case.

Kalshi spokesperson Elisabeth Diana described the issue as a procedural error involving submissions for a handful of contracts, many of which were not live. “We are already addressing the issue,” Diana said. A CFTC spokesperson did not immediately respond to Politico’s request for comment. Kalshi is valued at $40 billion, while competitor Polymarket is valued at $21 billion.

The investigation concerns notifications made through self-certification, a process that allows exchanges to list products as soon as the next day without express CFTC approval. Operators attest that contracts meet CFTC requirements, including a low risk of manipulation. Kalshi’s listings have ranged from oil-price derivatives to a wager on whether Defense Secretary Pete Hegseth faces impeachment.

Earlier this year, CME Group CEO Terry Duffy warned that some wagers risked manipulation and should not have gone live. In July, the CFTC’s market oversight division issued an advisory against filing one sweeping certification for many contracts. The CFTC is also investigating Polymarket, partly over whether it violated a 2022 settlement requiring the platform to block U.S. users.

The potential action comes as the CFTC asserts exclusive authority over prediction markets and challenges state efforts to regulate Kalshi. Kalshi is separately supporting the CFTC’s position, and on Monday joined Coinbase and four other firms in seeking permission to file a brief supporting the agency’s treatment of perpetual futures tied to individual U.S. stocks. Prediction markets have surged since Donald Trump’s election two years ago, while Democrats plan increased oversight after their midterm wins. Kalshi CEO Tarek Mansour has also proposed insider trading rules for Congress and administration officials.