Kalshi asks CFTC to allow margin trading on event contracts

Prediction market platform Kalshi filed with U.S. federal regulators on Tuesday, September 22, to seek approval to offer leverage on event contracts — a practice already common for stocks and futures on Wall Street. The filing with the Commodity Futures Trading Commission (CFTC), the federal regulator for event contracts, was submitted by Kalshi Klear, the company's internal clearing house, CNBC reported.

What the filing asks for

Kalshi Klear filed under Regulation 40.5 for what it calls an Event Contract Margin Framework, according to a public notice. Under that process, the changes would take effect no earlier than the first business day after a 45-day review period — or later, if Kalshi Klear or the Commission decides otherwise.

Margin trading lets a trader borrow money to buy a larger position than the cash they put down. Today, all event contracts on regulated U.S. exchanges are entirely collateralized. Kalshi already offers leverage on its perpetual futures contracts, including crypto assets, but has not received approval to do the same for its prediction markets.

Why margin matters for institutional liquidity

Institutions watching the prediction market space have widely described margin as a critical step for bigger players to participate, since those firms are used to the practice in traditional equities and derivatives. In a memo provided to CNBC, Kalshi said leverage would make longer-dated prediction markets — contracts with expiry dates far in the future — more attractive to institutional traders.

The move is the latest round in a race for institutional money. Bloomberg News reported in July that rival Polymarket had made moves to obtain regulatory licenses to eventually offer margin trading on its event contracts in the U.S.

Limits and conditions

A Kalshi spokesperson told CNBC the company would not offer margin on its sports event contracts, nor on its culture and "mention" markets. Marginable contracts, if approved, would be available only to self-clearing members that have direct relationships with Kalshi Klear and meet certain capital requirements.

Kalshi also said it is seeking to introduce a system in which the capital required to obtain leverage increases as a contract approaches its expiry date. Prediction market volume, including Kalshi's, has surged over the past year, driven mainly by retail trading in sports-related offerings.

CNBC noted a commercial relationship with Kalshi that includes customer acquisition and a minority investment.