Prediction market giant Kalshi could face federal charges over its handling of regulatory notifications for new betting contracts, according to a report.
uncertain
Kalshi → face → report
The Commodity Futures Trading Commission is probing whether Kalshi properly notified the agency about dozens of products still in development, Politico reported Tuesday, citing a person with direct knowledge of the matter.
asserted
Politico → probe → matter
Kalshi acknowledged the regulatory scrutiny but downplayed the alleged violations.
asserted
Kalshi → acknowledge → violations
Company spokesperson Elisabeth Diana told The Post that the warning “is about a procedural error involving the submission of a handful of contracts, many of which weren’t live.”
asserted
many → tell → which
“We are already addressing the issue,” she added.
asserted
she → address → issue
The months-long investigation is said to focus in part on a regulatory process known as self-certification that allows federally regulated exchanges to introduce new financial products without advance approval from the CFTC.
asserted
exchanges → say → CFTC
Under the system, trading can begin as soon as the next day after an exchange certifies to the CFTC that its new contracts meet federal requirements, including standards intended to prevent market manipulation.
asserted
contracts → begin → manipulation
The process has drawn criticism as prediction market operators expand their offerings to include wagers on sports, elections and government policy decisions.
asserted
operators → draw → sports
The CFTC warned prediction market operators in July against making sweeping claims about the products they certify for trading.
uncertain
they → warn → trading
CME Group CEO Terry Duffy earlier this year raised concerns that some wagers were vulnerable to manipulation and should not have been permitted to begin trading, according to Politico.
uncertain
wagers → raise → Politico
The potential charges against Kalshi come despite a regulatory climate that has largely favored prediction markets under President Trump.
asserted
that → come → Trump
Under Chairman Michael Selig, the CFTC has backed prediction market operators in legal battles with state officials who accuse the companies of violating gambling laws, according to Politico.
uncertain
who → back → Politico
Democrats, fresh off their midterm election victories, are preparing to step up oversight of prediction markets when the next Congress convenes, Politico reported.
asserted
Politico → prepare → markets
Kalshi isn’t the only major operator facing scrutiny from the CFTC.
asserted
Kalshi → face → CFTC
The CFTC is examining whether Polymarket took adequate steps to keep US users off the site in the years following the agreement, Reuters reported last month, citing two people familiar with the matter.
asserted
Reuters → examine → matter
That portion of the investigation concerns Polymarket’s historical safeguards, including its methods for determining customers’ locations and its advertising activities in the US.
asserted
portion → concern → US
The agency is separately examining customer onboarding procedures and protections at Polymarket’s newer, federally regulated US operation, according to Reuters.
uncertain
agency → examine → Reuters
Polymarket agreed to restrict US trading on its offshore platform in January 2022 after the CFTC accused it of illegally operating an unregistered derivatives exchange.
asserted
CFTC → agree → exchange
The company was fined $1.4 million as part of the settlement.
asserted
company → fin → settlement
Questions about the effectiveness of those restrictions resurfaced during the 2024 presidential election, prompting investigations by the CFTC and Justice Department.
asserted
Questions → resurface → CFTC
The FBI searched Polymarket CEO Shayne Coplan’s Manhattan home in November 2024 as part of the federal scrutiny.
asserted
FBI → search → scrutiny
Both agencies closed their investigations the following year without bringing charges, although neither publicly explained the decision.
asserted
neither → close → decision
A CFTC spokesperson did not immediately respond to The Post’s request for comment.
asserted
spokesperson → respond → comment
The Aporia
