What is Kalshi? The Regulated Alternative

Kalshi: Prediction Markets Go Mainstream

Kalshi is the first CFTC-regulated prediction market exchange in the United States. Founded in 2021 by Tarek Mansour and Luana Lopes Lara, Kalshi received approval from the Commodity Futures Trading Commission to operate as a designated contract market (DCM), making it the only fully regulated prediction market available to U.S. residents.

This regulatory status is Kalshi's key differentiator. While platforms like Polymarket operate offshore and are unavailable to U.S. traders, Kalshi provides a legal, regulated path for Americans to trade on event outcomes.

How Kalshi Works

Kalshi's core mechanics are similar to other prediction markets. Users buy and sell contracts on the outcomes of events, with contract prices between $0.01 and $0.99 representing implied probabilities. Winning contracts pay out $1.00.

Key differences from Polymarket include:

• USD deposits: Kalshi accepts direct bank transfers and debit cards in U.S. dollars — no cryptocurrency required
• Regulated custody: Funds are held in segregated accounts with regulated banking partners
• Contract limits: Some markets have position limits set by the CFTC to manage systemic risk
• KYC/AML: Full identity verification is required, ensuring compliance with anti-money laundering regulations

Available Markets

Kalshi offers markets across a range of categories, though its selection is typically smaller than Polymarket's. Markets must be approved by the CFTC, which limits what Kalshi can list. Common categories include:

• Economics: Fed interest rate decisions, CPI data, GDP numbers, unemployment figures
• Politics: Election outcomes (after a landmark 2024 ruling allowed election markets)
• Climate: Temperature records, hurricane activity
• Technology: Company earnings, product launches
• Culture: Award shows, box office performance

The 2024 Election Market Victory

In 2024, Kalshi won a landmark legal battle against the CFTC to offer political event contracts, including presidential election markets. This was a watershed moment for the U.S. prediction market industry. The ruling opened the door for regulated political prediction markets in America, something that had been restricted for decades.

Kalshi's election markets quickly attracted significant volume, though they remained smaller than Polymarket's due to position limits and the platform's newer user base.

Fees and Costs

Kalshi charges a fee on profitable trades, typically around 7% of profits earned. There are no fees on losing trades or on deposits. This fee structure means Kalshi is free to use unless you make money, which aligns the platform's incentives with user success.

However, the 7% fee on profits is substantially higher than Polymarket's near-zero fee structure, which some active traders find significant.

Who Should Use Kalshi?

Kalshi is ideal for U.S.-based traders who want to participate in prediction markets within a regulated framework. It's particularly suited for:

• U.S. residents who cannot legally trade on Polymarket
• Users who prefer to deposit in USD rather than cryptocurrency
• Traders who value regulatory oversight and fund protection
• People primarily interested in economic and political markets

For non-U.S. users or those comfortable with crypto, Polymarket's deeper liquidity and wider market selection may be more appealing. Many serious prediction market participants use both platforms.