The U.S. Commodity Futures Trading Commission is preparing potential enforcement action against prediction market operator Kalshi over how it self-certified dozens of proposed contracts, according to POLITICO. The months-long investigation focuses on whether Kalshi properly notified the agency about contracts under development, and a person familiar with the matter said charges could arrive soon, though the case may also end in a settlement. Kalshi spokesperson Elisabeth Diana called the issue a procedural filing error involving a handful of contracts, adding that many of the affected products never went live.
The CFTC examination centers on the self-certification process, which allows regulated exchanges to list contracts without prior explicit approval, sometimes as soon as the following day, provided operators certify compliance with agency rules, including protections against market manipulation. The agency has separately been investigating Polymarket over whether it violated a 2022 settlement agreement that restricted access by U.S. users. The scrutiny comes as Democrats, following their gains in the November midterm elections, prepare stronger oversight of prediction markets. POLITICO reported valuations of Kalshi and Polymarket at $40 billion and $21 billion respectively.
The regulatory pressure is not limited to Washington. Roughly 20 state attorneys general have targeted Kalshi. Arkansas Attorney General Tim Griffin sued the platform on November 4, a day after the election, describing it as a "pocket-sized bookie" operating without a gaming license. In late October, Utah charged co-founders Tarek Mansour and Luana Lopes Lara with 13 felonies. Senator Jeff Merkley and Representative Maxine Waters have criticized prediction markets for allowing bets on elections, war and terrorism, while Senator Elizabeth Warren and Senator John Curtis sent joint letters asking platforms how they guard against insider trading.
Against that backdrop, Kalshi announced a $1 million grant program to support up to 50 research projects studying its 2026 midterm election markets. The platform said successful applicants will gain access to public platform data, with Kalshi Research — launched in December 2025 and modeled partly on research units at Anthropic and OpenAI — running the initiative. One study reported Kalshi’s directional accuracy reached 98.2% by the close of polls, up from 93.8% three months earlier, and its Brier score improved from 0.040 to 0.016. The platform reported more than $2.5 billion in trading volume on 2026 US midterm markets, nearly double the $1.3 billion from 2024.
Kalshi said favorites won 479 of the first 487 decided contests. CEO Tarek Mansour declared on X that "The power to decide what America sees changed hands," while co-founder Luana Lopes Lara called Kalshi "the future of news." Rival Polymarket had a slight edge over Kalshi’s House and Senate odds accuracy, according to a RotoWire breakdown. If the CFTC ultimately requires slower, contract-by-contract filings, that could curb the speed on which much of the prediction market sector’s growth depends.
