The Commodity Futures Trading Commission is investigating whether Kalshi failed to properly inform the agency of proposed event contracts. Kalshi calls it a minor filing issue and says it is working with the regulator.
The CFTC is investigating whether Kalshi failed to properly inform the agency of proposed event contracts, the prediction market platform confirmed to CNBC. Kalshi said the CFTC flagged weather-related contracts.
Kalshi did not say when the agency began investigating, and the CFTC did not immediately respond to a request for comment.
Kalshi calls it a procedural error
Kalshi described the matter as a minor issue in how the contracts were filed. Elisabeth Diana, head of communications at Kalshi, told CNBC the notice concerns "a procedural error involving the submission of a handful of contracts", many of which were not live.
Prediction market platforms may self-certify event contracts without the agency's prior approval, as long as they comply with the Commodity Exchange Act. Self-certification allows faster introduction of new contracts.
Part of wider regulatory scrutiny
Politico first reported the probe on Tuesday, noting charges could happen soon, based on the CFTC's private notification to Kalshi. Kalshi declined to comment on any possible charges.
The move is the latest by the CFTC as it seeks to rein in prediction markets. In August, the agency ordered Kalshi to take down sports-related "mention markets" while it looked into that event contract type.
The CFTC is also conducting a broad probe into competitor Polymarket, including whether the company violated a 2022 settlement that barred U.S. traders from its international platform.
Scrutiny may intensify further once the Democratic Congress is sworn in during January. Rep. Ro Khanna, D-Calif., called for a ban on sports prediction markets in a Tuesday social media post.
Source: CNBC
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