Kalshi faces possible CFTC charges over contract notifications

By Daniel Okafor

The U.S. Commodity Futures Trading Commission has privately warned Kalshi that it could face enforcement charges over alleged notification failures involving dozens of prediction-market contracts, according to a Nov. 10 POLITICO report.

A person familiar with the investigation said the regulator notified Kalshi privately about possible charges. The matter could still end in a settlement, and the agency has spent several months investigating whether Kalshi met federal product-filing requirements before trading began.

Kalshi acknowledged the warning but disputed the reported scale. Spokesperson Elisabeth Diana described the issue as “a procedural error involving the submission of a handful of contracts, many of which weren’t live.” “We are already addressing the issue,” Diana said.

That account differs from the person familiar with the investigation, who said regulators were reviewing notification requirements involving dozens of proposed products. The discrepancy has not been resolved publicly. The CFTC has not announced formal charges, identified the contracts under review or disclosed a proposed penalty, and it did not immediately respond to requests for comment.

What does Kalshi’s self-certification process require?

Self-certification lets federally regulated derivatives exchanges list certain products without seeking the CFTC’s explicit approval for each contract. Exchanges must notify the regulator and certify that proposed contracts comply with applicable requirements, including information on settlement procedures and assessments of manipulation risk.

Kalshi operates a CFTC-regulated derivatives exchange offering contracts tied to elections, financial markets, sports and other events. Customers trade positions on whether a specified outcome will occur, and each contract’s published rules determine settlement.

Self-certification places notification compliance at the center of product launches because an exchange can introduce a contract without case-by-case advance approval.

What did the CFTC’s July advisory say?

On July 24, the CFTC’s Division of Market Oversight instructed regulated exchanges to follow proper procedures when submitting event-contract certifications. The division raised concerns about filings that combined numerous possible event contracts in one submission with broad, template-style descriptions.

Such submissions could impede regulators’ ability to determine whether operators supplied enough information about settlement, market data and regulatory compliance. The division specifically warned that “broad, template-style certifications should not be submitted.”

The guidance still permits closely related contracts to be certified together under certain conditions, subject to applicable filing requirements. The advisory addressed designated contract markets generally and did not identify Kalshi as violating the rules.

Self-certification has become central to the debate over prediction markets as exchanges add contracts for political, sporting and financial events. CME Group CEO Terry Duffy previously questioned whether some event contracts had adequate protection against manipulation and raised concerns about which products reached regulated markets.

What could broader scrutiny mean for Kalshi?

Democratic lawmakers plan to increase congressional oversight when the next Congress begins, following their victories in the November 2026 midterm elections, POLITICO reported. Their scrutiny arrives as operators and states disagree over whether event contracts fall under federal derivatives rules or state gambling laws.

Kalshi argues that its products are federally regulated derivatives. Several state authorities have challenged the company’s ability to offer certain contracts without complying with local gambling restrictions, leaving the jurisdictional boundary contested.

Kalshi previously won a legal victory against the CFTC in 2024 concerning political event contracts, after which its available markets expanded. The company then moved into other derivatives categories and backed the regulator’s authority over U.S. stock-linked perpetual futures.

Crypto.news reported that Kalshi joined Coinbase, Payward, DRW, Jump Trading and Paradigm in that position. The companies submitted a proposed legal brief in a separate dispute over whether existing federal law permits those derivatives to trade on regulated exchanges.

Kalshi completed a $1 billion funding round in October at a $40 billion valuation. The company announced the financing in late October, co-led by Wellington Management and Sequoia Capital.

What is the separate Polymarket review?

The CFTC is separately examining whether Polymarket complied with restrictions tied to its 2022 enforcement settlement, including measures intended to prevent unauthorized U.S. access. The review asks about the offshore platform’s geographic restrictions and whether American users could access its services.

In January 2022, the regulator ordered Polymarket to pay a $1.4 million civil penalty for operating an unregistered facility offering event-based binary options. The settlement required the company to wind down noncompliant markets and stop violating applicable federal derivatives regulations.

The latest review also covers advertising, location controls and safeguards associated with Polymarket’s separate U.S. operation. No final enforcement decision has been announced in either the Polymarket review or the Kalshi investigation.

No charging deadline has been announced, leaving both investigations unresolved as the next Congress prepares broader oversight of prediction markets.