CFTC Warns Kalshi of Possible Enforcement Action Over Contract Listings

The Commodity Futures Trading Commission has privately told Kalshi that enforcement action could be on the way, according to Politico. The fight is over how the prediction market platform introduced new contracts, with regulators alleging it failed to properly notify the agency about dozens of products it planned to launch. The investigation has reportedly been running for months, and while charges may land soon, a settlement is still on the table.

Kalshi is shrugging it off. Company spokesperson Elisabeth Diana called the CFTC's warning a procedural matter tied to the submission of a handful of contracts, many of which never even went live. She said the company is already working to fix it. Kalshi also keeps insisting its offerings are traditional derivatives products, not wagers — the exact distinction at the center of the broader regulatory fight over prediction markets.

At issue is self-certification, the process that lets regulated exchanges start offering new contracts as soon as the next day after confirming they meet CFTC rules, including anti-manipulation safeguards. No explicit agency approval is required. That shortcut has drawn fire from Wall Street heavyweights: CME Group CEO Terry Duffy has questioned whether prediction market contracts could be vulnerable to manipulation. In July, the CFTC itself warned operators against using overly broad language when self-certifying products.

The scrutiny is heating up on multiple fronts. Prediction markets have exploded since Donald Trump's election, with Kalshi and rival Polymarket reporting valuations of $40 billion and $21 billion, respectively. That growth rode a warmer welcome from the CFTC under its current leadership, but the mood is shifting. After midterm victories, Democrats are preparing for tougher oversight in the next Congress, and Polymarket is already facing a broad CFTC investigation — including questions about whether it breached a 2022 settlement requiring it to block US users.

There's another problem for the industry: making money on these platforms may be harder than retail traders think. A Galaxy Research study of 2.9 million human-paced accounts on Polymarket found more than 69% finished below break-even, with traders collectively recording $338.9 million in losses. The study tracked on-chain activity — positions, entry prices, holding periods and payouts — while excluding accounts believed to be automated. The median retail account lost around $3, though some were down thousands.

Galaxy also found specialists were slightly less likely to profit than traders who spread across topics: 28% of specialists finished in the green versus 30.4% of generalists. Sports-focused traders fared worst, while technology and science specialists did better.