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The First CFTC-Regulated Prediction Market
The First CFTC-Regulated Prediction Market
| Regulation | CFTC-regulated (US) |
| Settlement | USD |
| Market Type | Binary contracts (event contracts) |
| Monthly Volume | $500M+ |
| KYC | Yes — US residents only |
| Custody | Custodial (Kalshi holds funds) |
| Fee | ~2% on winnings |
Kalshi is the first exchange regulated by the CFTC (Commodity Futures Trading Commission) to offer event contracts in the United States. After a multi-year legal battle with the CFTC over political event contracts, Kalshi won the right to offer markets on US elections — a landmark case that established prediction markets as legitimate financial instruments under US law.
Kalshi operates like a traditional financial exchange: it's custodial, requires KYC, accepts USD and is available only to US residents.
Kalshi's strength is economic and financial markets. Macro traders can trade on Fed interest rate decisions, CPI prints, GDP growth, unemployment rates, and Treasury yields — all with CFTC oversight. Political markets cover elections at federal and state levels.
The exchange also lists sports markets and entertainment markets. Unlike Polymarket, Kalshi's markets often have dedicated market makers providing liquidity, resulting in tighter bid-ask spreads on popular markets.
For US traders, Kalshi's regulatory status is a significant advantage. Funds are held in FDIC-insured accounts, there are no geo-restriction games, and the platform operates under full legal oversight.
Kalshi's legal victory over the CFTC in 2024 cleared the path for US prediction markets and triggered competition: Robinhood, Interactive Brokers and other major brokers have since announced plans to list similar event contracts.
Kalshi and Polymarket frequently diverge on the same events by 3–8 percentage points. A trader who can operate on both platforms — Kalshi (USD) and Polymarket (USDC on Polygon) — can systematically arbitrage these discrepancies.
The main friction is the KYC requirement on Kalshi limiting who can participate, and the USD/USDC conversion. Traders who have accounts on both platforms monitor major markets (elections, Fed decisions) for spreads exceeding 2–3% to cover transaction costs.
Kalshi is the top choice for US-based traders who want regulated, legally protected access to prediction markets. The CFTC oversight and USD support make it the go-to platform for institutional participants. For non-US users or those wanting broader market variety, Polymarket offers more.