What is Kalshi? The regulated US prediction market, explained

By Melvin Tercan, Octagon Research Editor

Kalshi is a US-regulated prediction market — a federally designated exchange where traders buy and sell yes/no contracts on real-world events, from Fed rate decisions to elections to tonight's game. Each contract settles at $1 if the event happens and $0 if it doesn't, which makes every price a live probability: a contract trading at 62¢ means the market puts the odds near 62%.

The exchange, in five facts

• Regulation: Kalshi is a CFTC-regulated Designated Contract Market (DCM) — the same federal designation held by CME and ICE Futures. It is the primary legal venue for US residents to trade event contracts.
• Founded: 2018, by Tarek Mansour and Luana Lopes Lara; public launch in 2021 after regulatory approval.
• What trades: binary event contracts priced $0.01–$0.99, settling at $1.00 or $0.00, across economics, politics, sports, weather, companies, entertainment, and crypto.
• How trades happen: a central limit order book — you trade against other participants, not against the house.
• Accounts: KYC-verified and funded in US dollars; supported deposit methods vary by account type and location.

How a Kalshi contract works

Every Kalshi market asks one precisely worded question — "Will the Fed cut rates at the September meeting?" — with a published settlement source that decides the answer. You can take either side:

• Buy YES at the ask price. If the event happens, each contract pays $1.00; your profit is $1.00 minus what you paid.
• Buy NO, which is economically the mirror: a NO at 38¢ is the same position as selling YES at 62¢.

You don't have to hold to settlement. Prices move continuously as news arrives, and most active traders close positions early — the same way an options trader might. When a market repricing is sharp, that move itself is information: Octagon's news feed is built by detecting exactly those moves across every active Kalshi market, every day.

Why the prices matter even if you never trade

Because payouts are binary, Kalshi prices are the cleanest public, dollar-weighted probabilities available for many real-world questions. Ahead of a Fed meeting, the rate-decision market is a real-time consensus that updates faster than any poll or pundit. Researchers, journalists, and investors read prediction market prices the way they read bond yields — as information. If that use case is yours, start with how to read a prediction market price as a probability.

What makes Kalshi different from Polymarket

The two biggest prediction markets sit on opposite sides of US regulation. Kalshi is CFTC-regulated, USD-settled, and open to US residents with a KYC'd account. Polymarket's main offshore platform is crypto-based and geo-blocks US users after a 2022 CFTC settlement; a separate, CFTC-regulated Polymarket US product (built on an acquired designated exchange) has been rolling out with jurisdiction-specific availability. Contract coverage and liquidity also differ by category — the full breakdown is in our Polymarket vs Kalshi comparison.

Is Kalshi legal — and what's contested

The exchange itself is federally regulated, and its right to list election contracts was cemented when the CFTC dropped its appeal in 2025. Sports event contracts are more contested: several states have challenged them as unlicensed gambling, and in 2026 a federal appeals court held Kalshi's sports contracts are "swaps" under federal law that preempt state enforcement — while litigation continues in other circuits and availability varies by state. The current state-by-state picture is covered in who can legally use Polymarket and Kalshi.

Frequently asked questions

What is Kalshi in simple terms?

Kalshi is a US-regulated exchange where you buy and sell yes/no contracts on real-world events — will the Fed cut rates, who wins an election, will it rain in New York. Each contract pays $1 if the event happens and $0 if it doesn't, so a price of 62 cents means the market collectively puts the odds around 62%.

Is Kalshi a betting site or an exchange?

Legally, Kalshi is a CFTC-regulated Designated Contract Market — the same category of federal designation held by CME and ICE Futures. Its event contracts are regulated financial derivatives, not state-licensed sports bets, and trades happen on a central limit order book against other traders rather than against the house. Several states have challenged the sports contracts in court; a 2026 federal appeals ruling sided with Kalshi's swaps classification.

Who owns Kalshi and when was it founded?

Kalshi was founded in 2018 by Tarek Mansour and Luana Lopes Lara and opened to the public in 2021 after receiving CFTC designation. It is a private, venture-backed company — it is not publicly traded, so you cannot buy Kalshi stock.

What can you trade on Kalshi?

Kalshi lists event contracts across economics (Fed decisions, CPI, jobs reports), politics and elections, sports, weather, company events like IPO timing and M&A, entertainment, and crypto prices. Octagon's live coverage tracks every active Kalshi market — typically thousands of open contracts at any time.

How do Kalshi prices become probabilities?

A Kalshi contract trades between $0.01 and $0.99 and settles at $1.00 or $0.00. Because the payout is binary, the price is the market's implied probability: a 28-cent contract implies roughly a 28% chance. Octagon's research compares that market-implied probability with a model-estimated probability for the same event, and calls the gap 'edge'.