The U.S. prediction market platform Kalshi has submitted an application to the U.S. Commodity Futures Trading Commission (CFTC) seeking to introduce margin trading on certain event contracts. This would allow eligible traders to open positions using borrowed funds in the future, rather than relying solely on full collateral.
Apply to selected contracts
Kalshi told CNBC that even if the application is approved, leverage will not be available to all users. Margin-enabled event contracts will only be accessible to a select group of traders, and sports, cultural, and "mention" markets will not be included in this arrangement.
Currently, regulated event contracts in the United States commonly operate on a fully collateralized basis, requiring market participants to deposit the full amount of funds before opening a position. Kalshi believes this model limits the appeal of longer-dated contracts to institutional capital.
Submitted by the internal clearing institution
This filing was submitted by Kalshi Klear, the clearing house under Kalshi. Event contracts in the United States are regulated by the CFTC, so this application essentially seeks to introduce margin mechanisms commonly used on Wall Street into regulated prediction markets.
Kalshi has previously offered leverage on perpetual futures products, but has not yet received similar approval for event contracts on its prediction market. In a memo submitted to CNBC, the company stated that offering leverage on event contracts with longer durations and more distant expiration dates would make them more attractive to institutional traders.
Open only to self-clearing members
According to Kalshi, if approved, margin-enabled contracts will be available only to self-clearing members who have a direct relationship with Kalshi Klear and meet certain capital requirements.
The company also plans to introduce a dynamic capital requirement mechanism. As event contracts approach expiration, traders who wish to continue using leverage will face higher capital requirements. This means the platform aims to enhance capital efficiency while managing risk as settlement approaches.
In July this year, Bloomberg reported that Kalshi’s competitor, Polymarket, is also advancing its efforts to obtain U.S. regulatory licenses, with one goal being to offer margin trading of event contracts in the U.S. market in the future. As platforms seek to attract more institutional liquidity, the product design of prediction markets is increasingly aligning with that of traditional derivatives markets.