Kalshi seeks CFTC approval to bring leverage to prediction markets

Kalshi is seeking regulatory approval to introduce leverage to its prediction markets, a move aimed at making event contracts more attractive to institutional traders.

Kalshi Klear, the company’s registered derivatives clearing organization, filed the proposal with the Commodity Futures Trading Commission on Tuesday. Kalshi Klear began clearing Kalshi contracts earlier this year following CFTC approval.

Event contracts on regulated US exchanges are currently fully collateralized, requiring traders to fund the full potential loss of a position. Margin would allow eligible participants to commit less capital upfront while taking larger positions.

Kalshi said the structure could be particularly useful for longer dated markets, where institutions would otherwise have capital locked up for months or years before settlement.

Under the proposal, margin requirements would increase as contracts approach expiration, reducing permitted leverage as the outcome becomes more certain.

Access would initially be limited to self clearing members with direct relationships with Kalshi Klear that meet specified capital requirements. Kalshi also said sports, culture and mention markets would not be eligible for margin trading.

Kalshi already offers margin on its perpetual futures business, which includes crypto and commodity contracts. The CFTC has certified perpetual products including gold and silver for trading on Kalshi.

The filing comes as prediction market platforms compete for institutional liquidity. Polymarket has also pursued regulatory permissions that could eventually allow it to offer non collateralized trading in the US.

Prediction market activity has expanded rapidly over the past year, driven largely by retail trading. Adding leverage would move the product structure closer to traditional futures and other derivatives markets used by professional investors.