Kalshi: the CFTC-regulated prediction market, its crypto links and its fight with the states

What is Kalshi? A US exchange, licensed by the Commodity Futures Trading Commission (CFTC), where people buy and sell yes-or-no contracts on real events, from where bitcoin trades at noon on Friday to who wins Sunday’s game. A winning contract pays $1 and a losing one pays nothing. The price in between, from 1 to 99 cents, works as the crowd’s estimate of the odds.

Kalshi has no token and no listed shares. Investors valued the private company at $22 billion in May 2026, and its contracts power the prediction markets inside Coinbase. A growing list of US states say its sports contracts are illegal gambling. Utah is the latest: on 20 October 2026 its attorney general sued Kalshi and two Susquehanna trading firms in state court.

What is Kalshi: a federally licensed market for event contracts

Three companies make up Kalshi. Kalshi Inc. is the parent. KalshiEX LLC is the exchange, designated a contract market (DCM, the licence futures exchanges hold) in CFTC release 8302-20 of 4 November 2020; it was then a Delaware company based in San Francisco. Kalshi Klear LLC is the clearinghouse, registered by the CFTC as a derivatives clearing organization on 29 August 2024, which took the number of registered clearinghouses to 18. Before Klear, MIAXdx (formerly LedgerX) cleared Kalshi’s contracts for about three years, Kalshi’s help center says.

Tarek Mansour and Luana Lopes Lara, both MIT graduates, founded the company in 2018 (CoinDesk gives 2019). Y Combinator is among its backers. Wikipedia dates the public launch to July 2021, and Kalshi’s recent announcements carry a New York dateline.

The difference from a sportsbook is the business model. Kalshi says it earns transaction fees and holds no position on outcomes: it lists contracts and matches buyers with sellers rather than setting odds and taking bets. The CFTC licence rests on that model. Utah’s lawsuit disputes it, alleging that a Kalshi affiliate and its market makers take the other side of customers’ trades.

How a Kalshi event contract works

Every market is a question with a Yes side and a No side. Say “Yes” trades at 62 cents. Ten Yes contracts cost $6.20. If the event happens, Kalshi Klear pays $10, a gain of $3.80 before fees. If it does not, the $6.20 is lost, and whoever bought No at 38 cents collects.

Prices come from an order book, as on a stock exchange: buyers post bids, sellers post offers, and a trade happens when they meet. A 62-cent price means traders, together, put the chance near 62%. It is not Kalshi’s forecast. The counterparty is another user or a market maker. Utah alleges that the affiliate Kalshi Trading and the two Susquehanna firms act as the house, an allegation no court has ruled on.

Settlement is centralised. Each market has written rules naming the source that decides the result, and a Kalshi team applies them. Kalshi Klear holds the collateral and pays the winners. Kalshi’s help center also advertises 3.25% annual interest on eligible balances, at a variable rate.

Kalshi fees: a charge on expected earnings

Kalshi’s help page on fees says the exchange makes money “by charging a transaction fee on the expected earnings on the contract”. Maker fees apply only to resting orders that end up filled, cancelling costs nothing, and some markets, such as elections, awards ceremonies and big championships, carry their own fees.

The help page does not give the formula; it points to a fee schedule on kalshi.com, which did not load for Coindaro on 21 October. Arkham Research gives the taker fee as 0.07 times the number of contracts times the price times one minus the price, and the maker fee as 0.0175 on the same base in markets that charge makers. Kalshi’s own API documentation is consistent with that: it calls the general structure “quadratic” and describes maker fees as a fraction of it.

The shape matters more than the constant. At 50 cents the taker fee is 1.75 cents per contract, so $1.75 on 100 contracts. At 90 cents it falls to 63 cents on 100. Kalshi’s developer documentation says fees are computed to a millionth of a dollar and that rounding overpaid within an order comes back as a rebate. Arkham adds a 2% processing fee on debit-card deposits and withdrawals; bank transfers (ACH) are free.

Kalshi and crypto: deposits, Solana markets and perpetual futures

Kalshi settles in dollars, yet crypto touches it in five places.

Crypto deposits through Zero Hash

USDC deposits opened on 28 October 2024 through Zero Hash, which converts the coins to dollars on arrival, so Kalshi never holds the crypto itself. Decrypt counted more than $20 million deposited in the first 36 hours. Bitcoin and WLD followed. On 23 May 2025 Solana’s SOL became the fourth supported coin, with crypto deposits allowed up to $500,000, The Block reported.

The help center now speaks only of “supported” assets and networks without listing them, so the deposit screen is the place to check before sending anything. Crypto transfers for US users go through Zero Hash; international users go through a provider the help center does not name. Kalshi charges nothing for crypto withdrawals, which require an earlier crypto deposit and typically arrive within 30 minutes.

Markets on crypto prices

Kalshi lists contracts on where bitcoin, ether and other coins will trade, for example a price range at a set hour. Most settle on a simple average of a CF Benchmarks real-time index over the 60 seconds before the time in the rules. Crypto was Kalshi’s second-largest category in July 2026, at about $6.1 billion behind sports, in a Pew Research Center analysis of The Block’s data that counts each contract at its $1 face value.

Tokenized Kalshi markets on Solana

On 1 December 2025 Kalshi began tokenizing its markets on Solana, “thousands” of them according to The Block. Two Solana firms link its off-chain order book to on-chain traders: DFlow, which supplies trading infrastructure, and Jupiter, the Solana swap aggregator, which had offered Kalshi contracts since at least November. A Builders Program put $2 million of grants on the table. John Wang, Kalshi’s head of crypto, wrote on X that tokenization is “the endgame: non-custodial, instant, and crypto-native”, Decrypt reported.

The launch coverage did not explain who holds the dollars behind a tokenized position or how a holder redeems it, and Coindaro found no 2026 volume figure for the Solana side. MoonPay announced on 5 May 2026 that it had bought DFlow.

Regulated perpetual futures

On 29 May 2026 Kalshi announced perpetual futures, contracts with no expiry date, with funding rates that reset every eight hours. The CFTC, chaired by Mike Selig, approved a bitcoin perpetual the same day, Fortune reported, and BTCPERP went live on 3 June, according to Bitcoin Magazine. Mansour called the product “Kalshi’s evolution from prediction market leader to next-gen derivatives exchange”. Gold and silver perpetuals followed in September after CFTC review, Crowdfund Insider reported. These contracts trade on Kalshi’s exchange, not on a blockchain, and none of the sources reviewed gave leverage limits.

Distribution through Coinbase and Robinhood

Coinbase opened prediction markets powered by Kalshi in all 50 states on 28 January 2026, fundable in dollars or USDC, Decrypt reported; Coinbase Ventures had already invested in Kalshi’s Series D. Robinhood has run a Kalshi-powered prediction markets hub since 17 March 2025, according to The Block.

Kalshi funding, valuation and trading volume

Kalshi raised four rounds in under a year, and each one at least doubled its valuation. The Series C figures come from Kalshi’s own announcement; the others come from press reports.

A fifth round has been reported but not announced. CoinDesk, citing The Information, wrote on 13 August 2026 that Sequoia and Wellington were in advanced talks to lead at least $750 million at about $40 billion. None of the parties had confirmed it by 21 October. Mansour said in June 2026 that a listing in 2027 was under consideration, CoinDesk reported.

With the Series F, Kalshi claimed “more than 90%” of US prediction-market activity and annualised volume up from $52 billion to $178 billion in six months; both are company figures, not audited ones. Kalshi publishes no revenue. An estimate published by Yahoo Finance, which applied the fee formula to trading data, put 2025 fees at about $263.5 million, 89% of it from sports.

Two ways to count Kalshi volume

Volume figures for Kalshi differ by a factor of three or more, because trackers count different things. DefiLlama counts the dollars traders paid (price times contracts). Pew and The Block count each contract at its $1 face value.

On DefiLlama‘s dollars-paid measure, Kalshi handled about $458.9 million on 19 October 2026, about $15.2 billion over the 30 days to that date and about $87.7 billion over 12 months. July 2026 came to about $12.4 billion. Pew’s face-value count for the same July gave Kalshi about $40.1 billion out of $53.0 billion for Kalshi and Polymarket together, roughly 76%, against about 53% in March.

Sports carry the business: 77% of Kalshi’s volume in May 2026, 81% in June and 78% in July, on Pew’s numbers. Every state case is aimed at that four-fifths.

Kalshi vs Polymarket: regulated exchange against crypto-native market

The two leaders sell the same product, a yes/no contract worth $1, and run it in opposite ways. Kalshi is a custodial US exchange: Kalshi Klear holds the money, deposits arrive by card, bank or Zero Hash, and Kalshi staff apply the settlement rules. Polymarket runs on Polygon, lets users keep their own wallets, uses its pUSD stablecoin as collateral and settles disputes through UMA’s optimistic oracle. It returned to the US in 2025 by buying the CFTC-licensed exchange QCEX.

Fees differ as well. Polymarket moved to a maker-taker model in early 2026, with rates from zero on geopolitical markets to 0.07 on crypto and rebates for makers, according to Arkham, which counted a record $33 billion of first-quarter 2026 volume for Kalshi against $26.17 billion for Polymarket.

Regulators tend to treat them as one target. Wisconsin’s April 2026 suit names both, as do Missouri’s September letters and Spain’s May block. Donald Trump Jr. advises both companies, and his firm 1789 Capital was reported on 1 September 2026 to be putting about $300 million into a $1 billion Polymarket round at about $21 billion, just under Kalshi’s last price.

Kalshi’s court fight over sports contracts

At the federal level Kalshi is licensed. Whether its sports contracts are federal derivatives or state-regulated gambling is the open question, and federal appeals courts have answered it both ways.

The election case Kalshi won against the CFTC

Kalshi’s first legal fight was with its own regulator. On 22 September 2023 the CFTC blocked its contracts on which party would control the House and the Senate, finding that they involved gaming and activity unlawful under state law. Kalshi sued in the US District Court for the District of Columbia, and Judge Jia Cobb ruled for it on 6 September 2024. On 2 October 2024 Judge Patricia Millett of the D.C. Circuit refused the CFTC a stay, so election contracts traded through the November vote. The CFTC asked to drop its appeal on 5 May 2025, and the court agreed two days later.

Sports contracts and the circuit split

Sports contracts opened a second front, against state gaming regulators, and three appeals courts have now ruled:

• The Third Circuit sided with Kalshi 2-1 against New Jersey on 6 April 2026 (KalshiEX v. Flaherty), holding at the preliminary-injunction stage that sports contracts on a CFTC-registered exchange are swaps and that federal law preempts the state’s gambling laws. Judge Jane Roth dissented.
• The Ninth Circuit ruled unanimously against Kalshi in Nevada’s case on 28 August 2026 (KalshiEX v. Assad). Kalshi asked the full court to rehear it on 9 September.
• The Sixth Circuit ruled unanimously for Ohio and Tennessee on 25 September 2026, finding that Kalshi had not shown the contracts are swaps and that federal law does not preempt the two states. Kalshi filed for a full-court rehearing on 13 October.
• In Kalshi’s own suit against Utah, Judge Robert Shelby entered judgment for the state on 4 August 2026, and on 8 September the Tenth Circuit refused to block Utah’s laws while Kalshi appeals.

One sentence from the Ninth Circuit has become the states’ line: the substance of the contracts “is sports gambling, regardless of whether Kalshi calls them swaps.”

New Jersey asked the Supreme Court on 2 September 2026 to hear the Third Circuit case (Flaherty v. KalshiEX, No. 26-299). The Supreme Court docket shows Kalshi’s response due on 9 November 2026, after an extension from 8 October, and 11 amicus briefs filed between 22 September and 8 October, from the NFL and 145 tribes to former CFTC chairman Gary Gensler. The Court has not agreed to take the case.

Utah’s lawsuit of 20 October 2026

Utah’s second case is in its own courts. On Tuesday, 20 October 2026, Attorney General Derek Brown sued Kalshi, four of its affiliates and two Susquehanna firms, Susquehanna International Group and Susquehanna Government Products, in the Third District Court, alleging an illegal gambling business running since September 2024. The complaint compares Kalshi’s role to that of “the manager of a back-alley gambling den”, The Block and the Salt Lake Tribune reported.

The state wants sports, election, politics, culture and “mentions” contracts blocked in Utah under court-approved geolocation, plus restitution. It estimates Kalshi’s fees from Utah accounts at $30.6 million to $61.2 million through 19 October and residents’ losses at about $5.5 million. More than 32,000 Utahns hold verified accounts, and Brown told them the suit is “against the companies. It’s not against you,” the Tribune reported. Kalshi spokesperson Jacki McGavick said the company answers to federal law and that the state case would not affect its federal litigation, according to crypto.news.

Missouri chose letters over a lawsuit. In September its attorney general sent cease-and-desist letters to Kalshi and five rivals. After the deadline passed, Crypto.com and Novig sued Missouri on 16 October; Coindaro had found no suit or public reply from Kalshi by 21 October.

The CFTC’s October 2026 rules

The CFTC now argues Kalshi’s side. It filed a brief in the Massachusetts case in April 2026, and under Chairman Mike Selig it proposed rules on when an event contract “involves” gaming on 10 June 2026. Then it went further. An interim final rule published in the Federal Register on 19 October says state- or tribe-licensed gambling, such as sportsbook wagers and casino games, falls outside the definition of a swap. A companion proposal published the same day would write event contracts into that definition. Comments on both close on 18 November 2026. Our explainer on how the SEC and CFTC are writing US crypto rules covers the wider agenda.

Where the Kalshi cases stand on 21 October 2026

• Kalshi’s Supreme Court response to New Jersey is due on 9 November.
• Rehearing requests in the Ninth and Sixth Circuits are pending.
• The Fourth Circuit (Maryland, argued 7 May 2026), the Second Circuit (New York), the Tenth Circuit (Utah) and Massachusetts’ Supreme Judicial Court have not ruled.

Kalshi in France, Italy and Spain: excluded or blocked

Inside the US, Kalshi is open with exceptions. Under a July 2026 agreement with the Nevada Gaming Control Board, it keeps sports, election and entertainment contracts away from Nevada users through a third-party geofence, with a $120,000-a-day penalty for missing the 12 August deadline.

Outside the US, the help center says people can trade “from many countries” after identity checks, depositing by debit card, wire (minimum $1,000) or crypto and withdrawing by card or crypto only. The country list sits in Kalshi’s member agreement, a kalshi.com document Coindaro could not open. Kalshi told Cointelegraph in October 2025 that 38 jurisdictions were restricted, France among them. The Italian site Borsa&Finanza counted 55 in June 2026, including France, Italy, Spain, Germany and the UK.

• France: Kalshi does not serve people located in France. The gambling regulator ANJ ordered internet providers to block Polymarket on 16 July 2026; its notice does not mention Kalshi.
• Italy: Punto Informatico reported on 13 July 2026 that the regulator ADM had ordered Kalshi blocked from 27 July, alongside Polymarket. No other outlet reported the Kalshi part, and ADM’s own list could not be checked.
• Spain: the gambling regulator DGOJ blocked Kalshi and Polymarket as a precautionary measure for operating without a licence, Cointelegraph reported on 26 May 2026. Kalshi declined to comment.

Kalshi’s founders and advisers

Tarek Mansour is co-founder and chief executive. He studied mathematics and computer science at MIT and traded at Citadel until 2018, according to Wikipedia. Luana Lopes Lara, the other co-founder, was born in Brazil and studied computer science at MIT; at 29 she became the youngest self-made female billionaire, CoinDesk reported in December 2025. John Wang leads crypto. A Sequoia executive sits on the board, CoinDesk reported.

Donald Trump Jr. became a strategic adviser in January 2025. A co-founder told The Wall Street Journal he would help find partners and widen the audience, Fortune reported, and he reportedly received shares worth more than $300,000.

Risks of using Kalshi

The legal risk comes first. Most of Kalshi’s volume comes from a product two federal appeals courts have called gambling, and a ruling for the states could shut sports markets state by state.

Custody is the second. Funds sit with Kalshi Klear, a CFTC-registered clearinghouse, not in your own wallet. No smart-contract or security audit has been published; oversight comes from the CFTC’s rules for exchanges and clearinghouses. Settlement depends on Kalshi’s reading of its own rules. Kalshi froze its market on the ousting of Iran’s supreme leader, Ali Khamenei, citing a ban on contracts “directly tied to death”, and about $77 million of winnings were not paid out, according to Arkham.

The product itself is the third. Sports contracts behave much like sports bets, the point the NFL, the American Gaming Association and 145 tribes press in their Supreme Court briefs. Thin markets have few resting orders, so a large order can move the price against the trader placing it.

Then there are fakes. Kalshi has no token. Any coin or “airdrop” using the Kalshi name on a decentralised exchange is not Kalshi’s; our guide on how to spot crypto scams lists the warning signs.

What to check before opening a Kalshi account

1. Check that your country and US state are allowed under Kalshi’s member agreement.
2. Read the rules of each market, including the source that decides the result.
3. Work out the fee at your price with the formula in Kalshi’s current fee schedule.
4. Before sending crypto, confirm the coin and network on the deposit screen.
5. Note 9 November (Kalshi’s Supreme Court response) and 18 November (CFTC comment deadline).

Kalshi’s position has not moved: states, it argues, “can’t just shut down a federally licensed exchange”, in the words the Salt Lake Tribune quoted. The Supreme Court will see Kalshi’s written answer to New Jersey on 9 November.