Prediction market Kalshi has formally requested approval from the US Commodity Futures Trading Commission (CFTC) to introduce event-based derivatives tied to major American sports leagues.
If approved, the contracts will allow traders to buy and sell positions on whether a specific team will win a championship in leagues such as the NFL, NHL, NBA, and NCAA.
Traders will be able to purchase shares at prices between $0.01 and $0.99, with payouts structured so that holders of a winning position receive $1 per share.
Kalshi stated that the market would remain open until an official result is announced, and certain contingencies are in place to account for unexpected changes, such as event postponements or cancellations.
Kalshi has submitted certification documents, an explanation of the contract’s structure, and a request for confidential treatment under the Freedom of Information Act (FOIA) for proprietary details.
To maintain market integrity, certain individuals will be restricted from trading these contracts.
Current and former players, coaches, and staff from the listed leagues will not be allowed to participate.
League employees, team owners, and paid officials are also banned, along with household members and immediate family of restricted individuals.
Additionally, only those aged 18 and older will be allowed to trade these contracts. However, the legal age for sports betting in most US states is 21, which could become a key issue in regulatory discussions.
Crackdown or regulated future?
Kalshi’s request comes amid increased regulatory scrutiny of sports-based event contracts.
Earlier this month, the CFTC launched a 90-day review of Crypto.com’s sports contracts and ordered the platform to suspend trading in the meantime.
A Crypto.com spokesperson criticised the move, saying: “It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration.”
Kalshi has previously clashed with the CFTC over election event contracts, but the company successfully won a case in Federal Appeals Court last year, allowing it to offer contracts for the 2024 US Presidential Election.
In a high-profile move, Donald Trump Jr. recently joined Kalshi as an advisor.
Earlier this week, President Donald Trump appointed CFTC official Caroline Pham as the agency’s acting chair, following the resignation of Rostin Behnam.
Behnam stepped down at the beginning of January after more than seven years at the regulator.
Pham, known for her pro-crypto stance, has previously voiced support for political event contracts and believes the CFTC has a role in establishing a regulatory framework for prediction markets.