The Commodity Futures Trading Commission is investigating whether prediction market platform Kalshi failed to properly inform the agency about proposed event contracts, Kalshi confirmed to CNBC. Kalshi called it a minor issue in the way the contracts were presented and said he is working with the CFTC to address the matter. The CFTC pointed to climate-related contracts, Kalshi said. The leading prediction market platform did not say when the agency began investigating Kalshi. CFTC Chairman Michael Selig told CNBC that the agency does not comment on investigations. Politico first reported on the investigation on Tuesday, noting that charges could soon be filed, based on the CFTC’s private notice to Kalshi. The platform declined to comment on possible charges. Prediction market platforms can self-certify event contracts without prior approval from the federal agency, as long as they comply with the Commodity Exchange Act. Self-certification allows for faster introduction of new contracts. ‘Procedural error’ “The notification refers to a procedural error involving the submission of a handful of contracts, many of which were not in force,” said Elisabeth Diana, Kalshi’s head of communications. “We are already addressing the problem.” The move is the latest by the CFTC in its attempt to rein in prediction markets, which face increasing scrutiny in Washington from regulators and members of Congress. In August, the CFTC ordered Kalshi to eliminate sports-related “mention markets,” where speculators can trade on what individuals will say in a broadcast or speech, while it investigated the type of contract for the event. The agency is also conducting a wide-ranging investigation into its competitor Polymarket, including reviewing whether the company violated a 2022 agreement with the CFTC to ban U.S. traders from accessing its international trading platform. Polymarket’s domestic exchange operates separately from the global platform. Prediction markets are also expected to face greater scrutiny once the Democratic Congress takes office in January. Rep. Ro Khanna, D-Calif., in a Tuesday social media post about X, called for a ban on sports prediction markets, which account for the overwhelming majority of volume on leading platforms. — CNBC’s Talia Kaplan contributed to this report Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and a minority investment.
