Kalshi, one of the most ambitious and forward-thinking platforms that fought and won a legal battle to allow future contracts on the outcome of the United States presidential election, was put on notice by the federal government, and the US Commodity Futures Trading Commission (CFTC), to not offer markets that breach regulatory statures.
Regulated by the CFTC and Closely Monitored as Result
The specific case that necessitated the warning has to do with the fact that certain platforms have briefly accepted contracts on the fate of Luigi Mangione, a scion to a wealthy family, who is the presumed gunman that killed UnitedHealthcare CEO Brian Thompson on December 4, 2024.
Kalshi was among the first to pounce at the opportunity. Later in December, the platform already had several contracts that sought to elicit a strong response from consumers, which were subsequently halted on December 13. These contracts are phrased just like that – “contracts,” although the platform’s Apple and Google Store app has a “bet on the elections” call to action.
Now, Mangione’s case was a masterstroke for the company, as the murderer of the country’s largest insurer’s boss, both appalled onlookers and was met with encouragement from netizens who distastefully piled on jokes on Thompson’s death.
Either way, Kalshi had struck a gold mine, as the issue was prominent enough to make people care enough for it. One of the markets asked if users thought Mangione would be extradited to New York, where the crime was committed, although he was arrested in Pennsylvania.
One market, specifically “Is Luigi Mangione’s YouTube channel real?” saw as much as $441,000 placed in bets. Kalshi briefly had to withdraw all contracts 48 hours after they had gone live, pointing if not an accusation than at least an emphatical finger at regulators who had sent it a notice to halt the markets and remove them from its platform.
The CFTC did explain that it was not against Kalshi offering contracts on sensitive issues as a rule but insisted that they may still violate specific regulations, and in this case, Regulation 40.11. In other words, criminal activity is off-limits.
Kalshi Still Finds Its Way Between Betting and Prediction Markets
Of course, Kalshi is not only criticized over what is smart business. Rather, the platform has been repeatedly called a “gambling” platform despite Kalshi fighting a successful legal case and launching its prediction markets for the elections, and now other interesting events.
“People are betting on whether this person is allegedly responsible for the assassination of another human being, and here we are desensitized to this and betting on whether he’ll enter a guilty plea,” financial policy think thank Better Markets told in an interview for Bloomberg.
In the meantime, if you chance on Kalshi’s app on the Google Play Store, you will read the following headline as of January 2, 2025: “Kalshi: Bet on the headlines,” same for the company’s iOS app on the Apple Store.
