Kalshi warned of possible charges as feds turn up heat on prediction markets: report

Prediction market giant Kalshi could face federal charges over its handling of regulatory notifications for new betting contracts, according to a report.The Commodity Futures Trading Commission is probing whether Kalshi properly notified the agency about dozens of products still in development, Politico reported Tuesday, citing a person with direct knowledge of the matter.Kalshi acknowledged the regulatory scrutiny but downplayed the alleged violations.Company spokesperson Elisabeth Diana told The Post that the warning “is about a procedural error involving the submission of a handful of contracts, many of which weren’t live.”“We are already addressing the issue,” she added.The months-long investigation is said to focus in part on a regulatory process known as self-certification that allows federally regulated exchanges to introduce new financial products without advance approval from the CFTC.Under the system, trading can begin as soon as the next day after an exchange certifies to the CFTC that its new contracts meet federal requirements, including standards intended to prevent market manipulation.The process has drawn criticism as prediction market operators expand their offerings to include wagers on sports, elections and government policy decisions.The CFTC warned prediction market operators in July against making sweeping claims about the products they certify for trading.The certification process has also drawn criticism from Wall Street over concerns that some prediction market contracts could be vulnerable to manipulation.CME Group CEO Terry Duffy earlier this year raised concerns that some wagers were vulnerable to manipulation and should not have been permitted to begin trading, according to Politico.The potential charges against Kalshi come despite a regulatory climate that has largely favored prediction markets under President Trump.Under Chairman Michael Selig, the CFTC has backed prediction market operators in legal battles with state offici...