CFTC warns Kalshi it may be charged over how it notified the agency of dozens of new contracts

Kalshi, the prediction market valued at a reported $40 billion, has been warned that the Commodity Futures Trading Commission may bring charges against it, according to a Politico report relayed by Cointelegraph and the New York Post on Tuesday. The issue is whether Kalshi properly notified the agency about new products. Neither the CFTC nor Kalshi has published a filing; everything below is as reported, and the agency had not commented when the Post asked.

What is alleged

Per those reports, the CFTC has been investigating for months notifications involving dozens of products, and its private warning to Kalshi suggests charges could follow. Part of the focus is self-certification: the process that lets a federally regulated exchange list a new contract by telling the CFTC it meets the rules, with trading able to start as soon as the next day and no advance approval.

Kalshi spokesperson Elisabeth Diana described it to both outlets as a procedural error involving submissions for a handful of contracts, many of which were never live. The reports do not say which contracts are involved or what penalty the agency has in mind.

Why it matters more than the size of the alleged error

Self-certification is how prediction markets have grown so fast: sports, elections and government-policy contracts all reached traders without waiting for a regulator to sign off. The Post reports the process has drawn criticism from Wall Street, including from CME Group chief executive Terry Duffy, who raised concerns earlier this year that some contracts were open to manipulation and should not have been allowed to trade. The CFTC itself warned operators in July against making sweeping claims about the products they certify.

The timing is awkward for Kalshi because the CFTC has been its ally. Under Chairman Michael Selig the agency has backed prediction markets against state officials who say they are illegal gambling, and on Monday Kalshi joined Coinbase and four other firms asking to file a brief supporting the CFTC's treatment of perpetual futures on individual US stocks. A case that turns on paperwork rather than on whether the contracts are legal is a narrower threat than the state fights, but it lands on the one regulator Kalshi's legal position depends on.

The pattern around it

Kalshi is not the only target. The Post, citing Reuters, says the CFTC is also examining whether Polymarket kept US users off its offshore site after a 2022 settlement, and its newer US operation's onboarding and customer protections. The Post adds that Democrats, after their midterm wins, are preparing more oversight of prediction markets when the next Congress convenes.

We have followed Kalshi through each stage of this. In September a federal appeals court ruled against its sports contracts, days before it was reported to be raising money at about $40 billion. Earlier it denied being contacted by the CFTC over unusual trading in a perpetual contract. This warning is the first report that the agency has told it charges may follow.

What to watch

• Whether the CFTC files anything publicly, and which contracts it names.
• Whether any listed contracts are paused or delisted. None has been reported.
• Whether the reported Kalshi funding round or valuation changes. Nothing has been reported on that either way.

For people who trade event contracts, the practical point is narrow: nothing reported so far affects open positions or settlement. For the industry, it is a sign that the regulator that approved so much of the growth is checking how it was done. We will update this story if either side publishes details.

Sources: Cointelegraph and the New York Post, both citing Politico; the Post also citing Reuters on Polymarket. Allegations are unproven and Kalshi disputes their significance. This is market information, not investment advice.