Updated 9/22/2023: CFTC rejects Kalshi’s proposed election contracts.
The Monday, June 26th meeting was cancelled and the CFTC announced that it has commenced a review of contracts self-certified by Kalshi.
Below is a summary of background information for the Commodity Futures Trading Commission’s (CFTC) meeting this Monday about Kalshi’s Congressional control market.
Event Details
June 26, 2023, virtual meeting
Monday, June 26, 2023
12:00 p.m. – 1:00 p.m. (EDT)
Virtual Viewing/Listening Instructions: To access the live meeting feed, use the dial-in numbers here or stream at www.cftc.gov. A live feed can also be streamed through the CFTC’s YouTube channel.
The Commission will consider the commencement of a 90-day review, pursuant to CFTC Regulation 40.11(c), of KalshiEX, LLC congressional control contracts.
Extended Submission Review Period: The Commission may notify a registered entity that it is staying a certified rule or rule amendment for as many as 90 calendar days from the date of the notification. A rule or rule amendment subject to a stay becomes effective, pursuant to the certification of the registered entity, at the expiration of the additional 90-day period unless the Commission withdraws the stay prior to that time or the Commission notifies the registered entity during the additional 90-day period that it objects to the proposed certification on the grounds that it is inconsistent with the Act or the Commission’s regulations thereunder.
For a rule submission under extended review, the Commission will provide not less than a 30-day public comment period within the 90-day period in which the stay is in effect. Details regarding such public comment period will be posted on the Commission’s website.
CFTC Commissioners
Commissioner Kristin N. Johnson (D)
Commissioner Christy Goldsmith Romero (D)
Commissioner Summer K. Mersinger (R)
Commissioner Caroline D. Pham (R)
Legal Code
17 CFR § 40.11 Review of event contracts based upon certain excluded commodities.
(a) Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following:
(1) An agreement, contract, transaction, or swap based upon an excluded commodity, as defined in Section 1a(19)(iv) of the Act, that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law; or
(2) An agreement, contract, transaction, or swap based upon an excluded commodity, as defined in Section 1a(19)(iv) of the Act, which involves, relates to, or references an activity that is similar to an activity enumerated in § 40.11(a)(1) of this part, and that the Commission determines, by rule or regulation, to be contrary to the public interest.
(c) 90-day review and approval of certain event contracts. The Commission may determine, based upon a review of the terms or conditions of a submission under § 40.2 or § 40.3, that an agreement, contract, transaction, or swap based on an excluded commodity, as defined in Section 1a(19)(iv) of the Act, which may involve, relate to, or reference an activity enumerated in § 40.11(a)(1) or § 40.11(a)(2), be subject to a 90-day review. The 90-day review shall commence from the date the Commission notifies the registered entity of a potential violation of § 40.11(a).
(1) The Commission shall request that a registered entity suspend the listing or trading of any agreement, contract, transaction, or swap based on an excluded commodity, as defined in Section 1a(19)(iv) of the Act, which may involve, relate to, or reference an activity enumerated in § 40.11(a)(1) or § 40.11(a)(2), during the Commission’s 90-day review period. The Commission shall post on the Web site a notification of the intent to carry out a 90-day review.
(2) Final determination. The Commission shall issue an order approving or disapproving an agreement, contract, transaction, or swap that is subject to a 90-day review under § 40.11(c) not later than 90 days subsequent to the date that the Commission commences review, or if applicable, at the conclusion of such extended period agreed to or requested by the registered entity.
7 U.S. Code § 1a(19)(iv) Excluded commodity
CFTC Listing Procedures
Security Futures Products Regulations and Requirements
17 CFR § 40.2 – Listing products for trading by certification
17 CFR § 40.3 – Voluntary submission of new products for Commission review and approval
Kalshi Public Documents
7/19/2022 Congress [Associated Documents]
6/12/2023 Control [Associated Documents]
Differences between Kalshi proposals
The following table highlights the differences between Kalshi’s proposed 2022 Congressional Control market and the market submitted 10 days ago:
| Date | July 19, 2022 | June 12, 2023 |
| Rulebook | CONGRESS | CONTROL |
| Signer | Eliezer Mishory, Chief Regulatory Officer | Xavier Sottile, Head of Markets |
| Official Product Name | Will <party>be in control of the <chamber of Congress>? | Will <chamber of Congress> be controlled by <party> for <term>? |
| Procedure | Voluntary – 40.3(a) | Self-certifying – 40.2(a) |
| PredictIt References | “Contracts on political control of Congress available to US participants have been trading for nearly a decade. Since 2014, a similar contract has been available for trading on an unregistered trading venue that purports to operate under a No-Action Letter that was issued by the Division of Market Oversight in 2014 and granted relief to operate without complying with a number of aspects of the Commodity Exchange Act and Commission Regulations.” (Bashes PredictIt allusively for two pages.) | N/A |
| Classifying Independents | For the purposes of assigning party membership: Senator Angus King of Maine and Senator Bernard Sanders of Vermont shall be treated as members of the Democratic Party. | The Exchange will also consider the caucus decisions of Independent members. |
| Party | <party>: refers to a political party. For the 118th Congress, the Exchange will list contract iterations with “Democratic Party” or “Republican Party” values. | <party>: refers to a political party. |
| Position Limit | The Position Limit for the $1 referred Contract shall be $25,000 per Member | The Position Limit for the $1 referred Contract shall be as follows: The Position Limit for Individuals shall be $125,000 per Member; and $250,000 for those with demonstrated established economic hedging need The Position Limit for Entities shall be $5,000,000 per Member; and $10,000,000 for those with demonstrated established economic hedging need The Position Limit for Eligible Contract Participants (“ECP”) shall be $50,000,000 per Member; and $100,000,000 for those with demonstrated established economic hedging need |
| Order Size | N/A | Contracts must be purchased in multiples of 5,000 contracts per order. |
| Trading Prohibitions | N/A | Lists nine types of individuals and entities prohibited from trading this contract. Includes candidates, campaign staff, paid party employees, paid PAC employees, Paid employees of major polling organizations, existing Members of Congress, and existing Congressional staff and family. |
Kalshi Board
Alfred Lin, Sequoia Capital
Brian Quintenz, Former CFTC Commissioner
Timothy McDermott, Former CEO of Nadex
Luana Lopes Lara, Co-founder
Tarek Mansour, Co-founder & CEO
Kalshi Financials
Crunchbase Company Profile & Funding
Kalshi Lobbying
Rich Feuer Anderson:
Capitol Counsel: