Kalshi, a leading operator in the prediction market industry, has officially ventured into the sports event contracts sector, signaling a significant expansion in its offerings.
In a recent filing with the Commodities and Futures Trading Commission (CFTC), the New York-based company disclosed that it began offering derivatives tied to sports events on January 23. These contracts follow a straightforward format: “Will <team> win <title>?”. For instance, as of now, the platform features contracts allowing users to predict the winner of the AFC Championship Game between the Buffalo Bills and the Kansas City Chiefs. Traders can place “yes” or “no” bets on either team.
“The contracts operate similarly to other event-based offerings listed on the exchange,” Kalshi noted in its filing with the CFTC.
These contracts leverage a yes/no structure, with prices influenced by market participants’ expectations. For example, if more traders believe the Chiefs will win, the value of a “yes” contract for the Chiefs rises accordingly.
Kalshi’s Complicated Relationship with the CFTC
As the federal agency overseeing derivatives markets, the CFTC regulates prediction market operators like Kalshi. However, the relationship between Kalshi and the commission has been fraught with tension.
Ahead of the 2024 presidential election—a pivotal moment for prediction markets—the CFTC sued Kalshi to block it from offering political contracts. Meanwhile, Crypto.com recently introduced its own sports event contracts without awaiting CFTC approval, prompting scrutiny from the regulator.
Kalshi appears to be following a similar strategy, continuing to offer its sports contracts despite the absence of explicit approval. Legal experts suggest that the commission may adopt a more lenient stance on prediction markets under the current administration, given Republican leadership at the CFTC and the advisory role of Donald Trump Jr. with Kalshi.
Expanding Kalshi’s Sports Contracts Menu
Kalshi’s launch of sports event contracts coincides with key moments in the sports calendar, including the conference championship games and the upcoming Super Bowl—the most heavily bet-on event in the United States.
Beyond football, Kalshi aims to attract a diverse audience by offering contracts tied to other sports. Currently, the platform features contracts on NBA conference winners, league champions, the Stanley Cup, and the NCAA Men’s Basketball Tournament, among others.
By broadening its scope beyond football, Kalshi hopes to capture the interest of a wider array of sports fans and establish itself as a major player in the sports event contracts market.
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