Kalshi moves to launch margin trades pending US approval

Kalshi, the New York-based prediction exchange, is reportedly seeking regulatory clearance to launch margin trading, according to people familiar with the discussions. 

The prediction market has spent months in talks with the US Commodity Futures Trading Commission (CFTC) to seek permission to expand how traders fund positions, as reported on Friday by the Financial Times. As of the latest update, the CFTC has not indicated whether approval will be granted, and the status of the request remains largely unclear. 

Kalshi creates surveillance audit arm for regulatory approval push

According to a news article published on the prediction market provider’s website, Kalshi created an independent surveillance audit body that will publish quarterly public reports on suspicious trades and internal investigations. 

Moreover, it formed a Surveillance Advisory Committee that includes Lisa Pinheiro of Analysis Group and Daniel Taylor, director of the Wharton Forensic Analytics Lab. Taylor is well-versed in research on insider trading detection and fraud analytics. The committee will provide analysis to outside legal counsel and release statistics on flagged trades, investigations, and any disciplinary steps taken. 

Kalshi has also partnered with Solidus Labs, a firm specializing in monitoring market integrity. “We believe that by deploying Solidus’ agentic trade surveillance and compliance hub, Kalshi is demonstrating its highest commitment to consumer investor protection and market integrity,” said Founder and CEO of Solidus Labs, Asaf Meir.

The exchange could use the new oversight framework as part of an effort to move ahead of its offshore competitor, Polymarket, in the US market. Margin trading would let investors open positions without posting the full contract value upfront. 

Large trading desks manage hundreds of millions of dollars and prioritize markets with liquidity and financing flexibility, all features that prediction markets lack. Per Jake Preiserowicz, a partner at law firm McDermott Will & Schulte and a former CFTC staffer, margin is fundamental for institutional derivatives trading. 

“Margin is a central part of what hedge funds do right now. It’s basically impossible to trade derivatives any other way when you’re an institutional investor,” he said.

However, if the CFTC approves the request, Kalshi is likely to initially restrict margin contracts to institutional investors. Retail traders would probably be limited to fully funded positions during the early phase. 

The company recently hired a risk manager who previously worked at broker-dealer Velocity Clearing, who said the role helped him “build a strong foundation in margin and risk.” 

Kalshi to lead prediction markets into a ‘regulatory revolution’ 

When prediction exchanges debuted in July 2018, they began as small venues with betting markets limited to entertainment awards and elections. They have since grown into high-volume platforms for sports, geopolitics, and financial outcomes. 

Prediction markets grew even more popular during 2024’s US presidential elections, when monthly trading volumes at Kalshi and Polymarket reached millions of dollars. Still, major hedge funds have been avoiding the sector because of their collateral requirements.

Kalshi was also founded in 2018, but it had to secure regulatory recognition before launching any trading activities. It became the first US-approved prediction market exchange just two years later, and in 2024, financial watchdogs allowed it to operate a clearinghouse, but only for “fully collateralised” trades. 

That structure required customers to deposit the entire value of positions in advance, a requirement that margin trading would change. The regulatory sentiment shift on prediction platforms came under the leadership of Trump-appointed CFTC Chair Michael Selig. 

But according to former regulatory defense lawyer Bill Singer, leveraged exchange products blur the lines between trading and gambling.

“What we’re seeing in 2026 is the CFTC and SEC saying there’s not much of a difference between trading and gambling anymore. When you have ETFs offering triple leverage on all sorts of odd things, how do you justify extending margin to trade on a meme stock but not on a prediction market?” he said during an interview with FT.

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