Kalshi

Kalshi is a CFTC-regulated exchange where you trade binary event contracts: yes/no positions on real-world outcomes — inflation prints, Fed decisions, elections, weather, sports — priced between $0.01 and $0.99 and settling at $1 if you're right, $0 if you're wrong. You trade against other users on an order book, Kalshi charges a published fee (0.07 × contracts × price × (1 − price)), and positions are fully collateralized, so your maximum loss is what you paid. Since June 2026 it also offers leveraged crypto perpetual futures. It is a trading venue, not an investment platform: nothing pays yield, and every dollar won is another trader's dollar lost.

Legit, yes: KalshiEX is a CFTC-designated contract market with a real rulebook, its clearinghouse and FCM are registered, and AltStreet located no missed settlement or CFTC enforcement action in its scan. Legal is genuinely unresolved for the sports products: as of August 30, 2026 the Third Circuit has ruled for Kalshi, the Ninth Circuit ruled for the states (August 28), Arizona has filed criminal charges against the exchange, New York's Attorney General is suing, and roughly a dozen state, tribal, and private cases are pending — while the CFTC actively defends Kalshi with emergency orders. Federal-level legality of the venue is established; whether state gambling law also reaches its sports contracts is what the courts are deciding, likely ending at the Supreme Court.

Neither label fits cleanly, and the gambling half is the exact question in litigation: Kalshi says its contracts are CFTC-regulated derivatives (its own compliance documents call them 'swaps'), and several courts have agreed at the preliminary stage; several states say the sports contracts are unlicensed gambling, and other courts — including the Ninth Circuit on August 28, 2026 — have agreed with them. It is clearly not investing in the portfolio sense: event contracts create no ownership interest, yield, or claim on any asset — they are zero-sum derivative positions. Economically, the answer depends on the market: hedging a real exposure with a CPI or weather contract is classic risk transfer; buying NFL parlays at 18 is sportsbook economics on exchange rails. AltStreet's own 15,685-market study found no exploitable edge, so directional trading without one carries a negative expected value after fees either way.

Some traders do — it is a zero-sum market, so every winner is matched by a loser, minus Kalshi's fees. The honest base case: AltStreet tracked 15,685 Kalshi markets specifically hunting for exploitable edges and found that all four apparent ones were sampling artifacts, while academic research on 300,000+ contracts finds low-priced contracts systematically underperform after fees. Add the published fee formula, the bid-ask spread, and market makers (including Kalshi's own affiliate) who receive rebates and better tools, and the realistic expectation for a directional trader without a durable edge is a negative return after costs. The defensible economic use is hedging, not profit-seeking.

Read Kalshi's own words: member funds sit in the clearinghouse's omnibus settlement account at Silicon Valley Bank (a division of First Citizens Bank) with an insured cash sweep, and because that account is not in your name, 'FDIC insurance is not guaranteed to you.' No SIPC applies — these are not securities accounts. The real protection is CFTC segregation law, which is meaningful and is not deposit insurance. The FCM's filed monthly statements currently show customer funds comfortably in excess of requirements. Separately, Kalshi may invest your idle cash for its own benefit without paying you interest on event-contract balances.

The standard taker fee is 0.07 × contracts × price × (1 − price), rounded up to the next cent — peaking around 1.75 cents per contract at 50-cent prices, with a one-cent-per-order floor that makes small low-priced orders proportionally expensive. But the schedule is now per-series: 156 series carry non-standard terms (maker fees of $0.02-$0.44 per 100 contracts, different multipliers, some fee-free), and combos charge makers half the taker rate. Perpetuals add 8-hour funding payments between traders. The largest real cost is usually not the fee at all — it's the bid-ask spread, which AltStreet measured as wide outside headline markets.

Four disclosed ways: trading fees under the published schedule; the float — member cash may be invested by Kalshi under CFTC rules without notice, with no interest paid on event-contract balances; perpetuals economics through its FCM (funding-adjacent flows and margin interest spread above the 3.25% it pays); and market-data/API commercial terms. What it earns from each is unknown — Kalshi Inc. publishes no financial statements despite disclosing roughly $2.4 billion of venture capital raised across 2025-2026.

Gains are taxable and Kalshi provides year-end tax documents. The unsettled question is character: whether event contracts qualify for Section 1256's favorable 60/40 futures treatment or produce ordinary income is debated among tax practitioners and has not been definitively resolved — the difference matters for active traders. Perpetual futures may sit differently again. Keep independent records (the API exports everything) and resolve the character question with a tax adviser before trading at scale.

There are many, and they share one question: does federal commodities law preempt state gambling law for sports event contracts? New York's AG sued July 31, 2026 (unlicensed sports betting, under-21 allegations; Kalshi removed the case to federal court and the CFTC sought to block the state). Arizona filed criminal charges in March 2026. Wisconsin and Kentucky sued Kalshi together with Robinhood, Coinbase, and Webull. Three tribal coalitions sued under the Indian Gaming Regulatory Act, one with a civil RICO count. Kalshi has won at the Third Circuit and in several trial courts; the states won at the Ninth Circuit on August 28, 2026, creating a circuit split. Everything is pending; nothing is finally decided.

Leveraged crypto futures with no expiration, launched June 2026 — BTC at up to 6.1x leverage, ETH 4.7x, plus SOL, XRP, and HYPE — margined through Kalshi's own FCM (Kalshi Prime), with funding exchanged between longs and shorts every 8 hours and 3.25% interest paid on margin cash. Kalshi markets itself as the first US company to offer perpetuals. Unlike Kalshi's fully collateralized event contracts, perps carry liquidation risk: this is high-risk leveraged speculation in a regulated wrapper, and the wrapper does not change the arithmetic.

This is the use case AltStreet finds most defensible. Fed-decision, CPI, recession, commodity-price, and weather markets let you offset specific exposures — a floating-rate liability, inflation-sensitive costs, weather-dependent assets — with defined maximum loss, no margin calls (event contracts are fully collateralized), and immediate exit via the order book. Practical requirements: check depth in your specific market at your intended size first (liquidity concentrates heavily in headline markets), treat the spread as your real cost, and size positions as insurance premiums, not investments.

Kalshi is US-regulated (CFTC-designated exchange, KYC required, US bank custody, 18+, dollar-denominated); Polymarket operates on crypto rails with a different and historically offshore regulatory posture. Kalshi's advantages are the regulated wrapper, cash settlement, and legal recourse; its constraints are US-jurisdiction fights over sports contracts and restricted access from ~50 countries. AltStreet's markets pipeline tracks both venues daily — with the measurement caveat that their published statistics are not directly comparable (Kalshi's volume field and market-count sharding require methodology choices AltStreet documents in its data work).

Kalshi Inc. is a private Delaware company founded in 2018 by CEO Tarek Mansour and Luana Lopes Lara, MIT graduates who worked at Goldman Sachs, Citadel, and Bridgewater, and went through Y Combinator in 2019. Its Form D filings disclose roughly $2.46 billion of equity sold to institutional investors across seven offerings (2020-2026), including $1.12 billion reported in the August 25, 2026 filing — but no cap table, valuation, or financial statements are published. An active ecosystem of pre-IPO SPVs (six Hiive series among them) resells its equity to accredited investors; press-reported valuations are unverified by any filing.