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APPENDIX C (CONFIDENTIAL) – SOURCE AGENCY

The data which is used to determine the Expiration Value of the Contract is published by the 

Library of Congress, the official government repository of information for the public since 1800. 

Congress.gov is an affiliate of the Library of Congress and contains a record of all members of 

Congress, their leadership status, and party membership. It updates every weekday morning at 8:00 

AM with the complete record of the previous day’s activities.

As stated on the Congress.gov website:

Congress.gov is the official website for U.S. federal legislative information. The 

site provides access to accurate, timely, and complete legislative information for 

Members of Congress, legislative agencies, and the public. It is presented by the 

Library of Congress (LOC) using data from the Office of the Clerk of the U.S. 

House of Representatives, the Office of the Secretary of the Senate, the 

Government Publishing Office, Congressional Budget Office, and the LOC’s 

Congressional Research Service.

Congress.gov is usually updated the morning after a session adjourns. Consult 

Coverage Dates for Congress.gov Collections for the specific update schedules and 

start date for each collection.

Congress.gov supersedes the THOMAS system which was retired on July 5, 2016. 

Congress.gov was released in beta in September 2012. The THOMAS URL was 

redirected to Congress.gov in 2013. The beta label was removed in 2014.

The scope of data collections and system functionality have continued to expand 

since THOMAS was launched in January 1995, when the 104th Congress 

convened. THOMAS was produced after Congressional leadership directed the 

Library of Congress to make federal legislative information freely available to the 

public.

Congressional documents from the first 100 years of the U.S. Congress (1774-

1875) can be accessed through A Century of Lawmaking.

133

133 https://www.congress.gov/about
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The information used to determine the Expiration Value of the Contract is highly visible. Any 

discrepancy between the true value and the reported values at the Source Agency would be swiftly 

detected and any individual who engaged in said manipulation of the Source Agency would likely 

be fired. Importantly, the Exchange has chosen to only use official government sources to 

determine the Expiration Value of the Contract. The Exchange understands that political control 

can often be hotly contested, with accusations that an election is stolen. Moreover, the Exchange 

understands that news agencies frequently “call” the results of elections incorrectly. As a result, it

does not use any news reporting in our determinations, nor the results of election certifications, as 

individuals may step down or resign prior to actually taking office. The Exchange thus relies on 

the official federal government report of who actually took office. 

In summary, the data which will be used to determine the Expiration Value of the Contract is 

prepared by the Library of Congress, the official website of the United States Senate, and the 

official website of the Clerk of the House of Representatives, in a rigorous manner with multiple 

layers of checks in place to ensure the highest accuracy possible, and there are robust safeguards 

against any potential manipulation. 
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APPENDIX D (CONFIDENTIAL) – COMPLIANCE WITH CORE PRINCIPLES

Compliance with Core Principles

The Exchange has conducted a comprehensive analysis of the designated contract market core 

principles (“Core Principles”) as set forth in Part 38 of the Act. The Core Principles relevant to the 

Contract are outlined and discussed in further detail below:

Core Principle 2 - Compliance with Rules and Impartial Access: The Exchange has adopted 

the Rulebook, which provides the requirements for accessing and trading on the Exchange. 

Pursuant to Chapter 3 of the Rulebook, Members must utilize the Exchange’s services in a 

responsible manner, comply with the rules of the Rulebook (“Rules”), cooperate with Exchange 

investigations, inquiries, audits, examinations and proceedings, and observe high standards of 

integrity, market conduct, commercial honor, fair dealing, and equitable principles of trade. 

Chapter 3 of the Rulebook also provides clear and transparent access criteria and requirements for 

Exchange Members. Trading the Contract will be subject to all the rules established in the 

Rulebook, which are aimed at enforcing market integrity and customer protection. 

In particular, Chapter 5 of the Rulebook sets forth the Exchange’s Prohibited Transactions and 

Activities and specifically prescribes the methods by which Members trade contracts, including 

the Contract. Pursuant to Rule 3.2, the Exchange has the right to inspect Members and is required 

to provide information concerning its business, as well as contracts executed on the Exchange and 

in related markets. Chapter 9 of the Rulebook sets forth the Exchange’s Discipline and Rule 

Enforcement regime. Pursuant to Rule 9.2, each Member is required to cooperate with an 

Exchange investigation by making their books and records available to the Exchange. The 

Exchange’s Market Regulation Department performs trade practice surveillance, market 

surveillance, and real-time market monitoring to ensure that Members adhere to the Rules of the 

Exchange. The Market Surveillance Department reserves the authority to exercise its investigatory 

and enforcement power where potential rule violations are identified. 

Core Principle 2 also stipulates that an exchange shall establish means to provide market 

participants with impartial access to the market. Chapter 3 of the Rulebook, and Rule 3.1 in 

particular, provides clear and transparent access criteria and requirements for Members. The 

Exchange will apply access criteria in an impartial manner, including through the application 

process described in Rule 3.1. 

Core Principle 3 - Contract not Readily Susceptible to Manipulation:

Core Principle 3 and Rule 38.200 provide that a DCM shall not list for trading contracts that are 

readily susceptible to manipulation. The Exchange’s marketplace and contracts, including this 
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Contract, have been designed in accordance with this fundamental principle. The Exchange 

maintains various safeguards against outcome manipulation and other forms of manipulation, 

including, (i) automatic trade surveillance and suspicious behavior detection, (ii) Rulebook 

prohibition, Member certification, and notification, (iii) Member monitoring and know-yourcustomer verification, and (iv) sanctions. These safeguards render the Contract not readily 

susceptible to manipulation. 

(i) Automatic trade surveillance and suspicious behavior detection: The Exchange’s trade 

monitoring and market surveillance systems compute statistics using information from all trades 

that occur on the Exchange over a range of timeframes, ranging from per trade to the full history 

of trading activity. These statistics are geared towards identifying unusual trading activity and 

outlier behaviors. If the trade monitoring and market surveillance system identifies behavior 

deemed to be unusual, the Exchange’s compliance personnel have the ability to investigate and 

determine applicable sanctions, including limits to or suspension of a Member’s access to the 

Exchange. 

(ii) Rulebook prohibition, member certification and notification: The Exchange’s Rulebook 

includes various provisions that prohibit manipulative behaviors. As noted above in the discussion 

of Core Principle 2, the Exchange’s Rulebook gives the Exchange the authority to investigate 

potential violations of its rules. Pursuant to Rule 3.2, the Exchange has the right to inspect 

Members’ books and records, as well as contracts executed on the Exchange and in related 

markets. Pursuant to Rule 9.2, each member is required to cooperate with an Exchange 

investigation by making their books and records available to the Exchange for investigation. The 

Exchange’s Market Regulation Department performs trade practice surveillance, market 

surveillance, and real-time market monitoring to ensure that Members adhere to the Exchange’s 

rules. The Rulebook also imposes sanctions on Members who break rules. Potential penalties 

include fines, disgorgement, and revocation of membership in Kalshi. Only Members are allowed 

to trade on the Exchange, and the Exchange requires its Members to strictly comply with the 

Rulebook. Members cannot complete the account creation process and trade on the Exchange until 

they certify that they have read the Exchange’s rules and agree to be bound by them. 

In addition, the Exchange requires applicants for membership to represent and covenant that the 

applicant will not trade on any contract where they have access to material non-public information, 

may exert influence on the market outcome, or are an employee or affiliate of the Source Agency. 

In order to further reduce the potential for manipulation, the Exchange maintains a dedicated page 

on the trading portal that lists all the source agencies and their associated contracts, together with 

a warning that employees of those companies, persons with access to material non-public 

information, and persons with an ability to exert direct influence on the underlying of a contract 

are prohibited from trading on those contracts. This page is intended to serve as an effective means 

of raising Members’ awareness of these rules and prohibitions, further reducing the potential for 
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manipulation. Similarly, the Exchange places a prominent notice on each contract page that 

notifies Members of the prohibition on trading the Contract while employed by its Source Agency, 

trading the Contract on the basis of non-public information, and trading the Contract while having 

the ability to exert influence on the Contract’s Market Outcome. 

(iii) Member monitoring and know-your-customer verification (“KYC”): The Exchange has 

a robust KYC process. The KYC process is an important tool that helps flag and uncover higher 

risk traders before they become Members of the platform. The Exchange’s KYC process leverages 

technology to develop a clear and proper understanding of its members, and the various risks they 

may pose with respect to market integrity and fairness, including manipulation. During the 

application process, applicants are required to share personally identifiable information, such as 

their full legal name, identification number, date of birth, and address with the Exchange. 

Additionally, applicants are required to provide a government issued photo ID (passport, drivers 

license, etc.) that is used to validate the personally identifiable information shared by the applicant 

during the application process. Applicant information is run through a comprehensive set of 

databases that are actively compiled and maintained by an independent third party. The databases 

are utilized by the Exchange to identify applicants that are employees or affiliates of various 

governments and other agencies. Moreover, the databases can identify known close relatives and 

associates of such people as well. Applicants that are flagged go through enhanced due diligence, 

including manual review, as part of the onboarding process. 

Additionally, as part of the KYC process, the Exchange runs applicants through adverse media 

databases. The adverse media dataset is a real-time structured data feed of companies and 

individuals subject to adverse media. Monitoring thousands of news sources, business and trade 

journals, in addition to local, regional and national newspapers, the adverse media feed isolates 

and highlights any entities or individuals subject to a range of adverse media. The Exchange 

utilizes the database to trigger enhanced due diligence, because applicants with adverse media may 

be more likely to engage in certain types of unlawful activity including market manipulation. 

The Exchange engages in active and continuing KYC checks. The KYC checks are initially 

performed upon application, and the Exchange then monitors its Members on an ongoing basis by 

running member information through the KYC databases. If material new information concerning 

an existing Member is at some point added to a database, the Exchange’s system will flag the 

Member even if the cause for the flag was not extant at the time of the Member’s application. That 

Member will then go through enhanced due diligence. 

(iv) Sanctions: Exchange Members must agree to the terms and conditions of the Exchange’s 

Rulebook before being allowed to trade. As a result, Members are subject to disciplinary actions 

and fines for engaging in improper market conduct that is prohibited by the Exchange’s Rulebook. 

In the event that suspicious trading activity is detected and results in an investigation initiated by 
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the Exchange, market participants are required to provide the Exchange with information relevant 

to the scope of the investigation under Rule 3.2. Chapter 9 of the Exchange’s Rulebook details the 

process for discipline and rule enforcement. Disciplinary action can range from a letter of warning 

to fines to referral to governmental authorities that can result in criminal prosecution.

In addition to these global policies and safeguards, there are a number of contract specific attributes 

and considerations that render the Contract not readily susceptible to manipulation.

In addition to these global policies and safeguards, there are a number of contract specific attributes 

and considerations that render the Contract not readily susceptible to manipulation.

Congress.gov is a division of the U.S. Library of Congress with multiple checks on publishing 

data. For example, given that Congress.gov is publicly available for any Congressional official or 

member of the public to access, discrepancies between whether an individual has or has not been 

made leader on Congress.gov (and their party membership) would likely be detected quickly, 

making manipulation of the website unlikely. In addition to the general availability of 

Congress.gov, the Contract relates to a high-profile event, which is the subject of immense media 

coverage and interest. Thus, any attempt to publish incorrect data would be quickly noticed and 

identified. The negative consequences that Library of Congress staff would likely face for 

publishing incorrect data in order to intentionally manipulate the market would also serve as a 

strong disincentive from attempting manipulation. 

With regard to possible outcome manipulation, the only groups that can directly affect the 

leadership decisions are the U.S. Senate and U.S. House of Representatives. Members of this 

group are extremely unlikely to attempt intentional manipulation of the leadership of their 

chambers to settle the Contract a certain way--the economic and political ramifications of which 

are far greater than the position limits on the Exchange. Instead of considering the potential 

outcome of the Contract on the Exchange, legislators involved with the confirmation are more 

likely to incorporate other factors into their decision-making process, such as political 

circumstances. The weight of these factors is much greater than any consideration of a market on 

the Exchange - thus manipulation for the sole purpose of influencing the outcome of the Contract 

is unlikely. The amount of media attention and financial reporting done on potential changes in 

leadership means that opportunistic attempts to manipulate reporting to affect prices is likely to 

be ignored given the amount of attention given to the subject. Members of Congress also have a 

sworn duty to represent their constituents and would not manipulate Congressional processes for 

private gain. Their finances are also heavily monitored and subject to public disclosure and 

scrutiny.

Moreover, election officials swear an oath to faithfully uphold the results of the elections. 

Tampering with federal elections is a serious federal crime and the consequences of violating 

would be quite severe. Vote counting is also supervised by trained members of both parties, whose 

incentive is to detect any deviation or error. In addition, any close election results in a recount, and 

therefore any manipulation by an individual or small group of individuals could reasonably be 
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expected to be detected. Leaking results early in order to trade on the contract would also be very 

unlikely. 

As further evidence, consider the history of political control contracts. University of Michigan 

professor Paul Rhode and Wake Forest professor Coleman Strumpf conducted a systematic review 

of the history of prediction markets both domestically and abroad, documenting their emergence 

back to “16th century Italy, 18th century Britain and Ireland, 19th century Canada and 20th century 

Australia and Singapore.”134135 In the United States, they were popular from the post-Civil War 

period until the Great Depression tarnished the image of Wall Street in the public imagination. 

They wrote, 

Although vast sums of money were at stake, we are not aware of any evidence that the 

political process was seriously corrupted by the presence of a wagering market. This 

analysis suggests many current concerns about the appropriateness of prediction markets 

are not well founded in the historical record.136

Today, such contracts remain alive and well in other democracies like the United Kingdom, 

without documented attempts at–let alone successful–manipulation. Any effort to coordinate votes 

for the sake of the Contract would take significant planning and coordination, and is unlikely to 

occur because none can know beforehand what the margin of victory is going to be. Accordingly, 

the organizers would have no way of knowing the size of the conspiracy they would need to 

orchestrate. Such an attempt would be implausible. Large-scale coordination of sufficient volume 

to affect an election of even a few hundred thousand voters (as exists in the smallest states or midsize cities) would be too large to avoid scrutiny from market surveillance and counter-partisan 

mobilization. Nearly every commodity market can be altered if tens to hundreds of thousands of 

people all conspire simultaneously; however, it is nearly impossible to coordinate across tens of 

thousands of individuals without being visible. If this was a viable path, then highly motivated

partisans would already attempt to do so and profit from the myriad ways they could profit by 

knowing the outcome of an election beforehand. The reason this type of criminal activity does not 

occur is that such a scheme would be readily detected. 

One may also imagine that a coordinated group of individuals may conspire to manipulate market 

prices to give the false impression of candidate “momentum”, thus potentially harming the 

democratic process. This concern, too, is empirically implausible. Coleman and Strumpf in a later 

paper examined previous American political prediction markets and found that no previous effort 

at manipulation were capable of sustaining anything more than fleeting price movements. They 

134 Paul Rhode and Coleman Strumpf. 2003. “Historical Prediction Markets: Wagering on Presidential Elections”. 

135Paul Rhode and Coleman Strumpf. 2012. “The Long History of Political Betting Markets: An International 

Perspective.”

136 Paul Rhode and Coleman Strumpf. 2003. “Historical Prediction Markets: Wagering on Presidential Elections”. 
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wrote, “we find little evidence that political stock markets can be systematically manipulated 

beyond short time periods.”137 Moreover, the markets examined were much smaller and thus even 

more prone to manipulation than a fully regulated, liquid market like a DCM. As a result, the 

probability of manipulation is implausible. Indeed, as George Mason University professor Robin 

Hanson and University of California at Santa Barbara professor Ryan Oprea found in one paper, 

one major reason why political contracts are rather invulnerable to manipulation attempts is that 

any attempt to manipulate prices induces informed counter-parties to enter on the other side of the 

market.138 In fact, the greater the attempts to jazz up one side’s prices, the greater the returns to 

becoming an informed trader. As University of Michigan economist Justin Wolfers and Dartmouth 

economist Eric Zitzewitz write regarding previous political contracts, “none of these attempts at 

manipulation had a discernible effect on prices, except during a short transition phase.”139

There are also legal protections against disrupting or pressuring the voting process of others. For 

example, the secret ballot is a guaranteed right in the vast majority of state constitutions, and 

statutorily protected in the rest. 

The lack of substantiated attempts at manipulation of political control contracts by such methods 

is quite telling in the context of how much is already at stake in American elections. Trillions in 

stock value are deeply dependent on public policy outcomes; entire sectors, firms, and places can 

be favored by a candidate for office; and almost every actor in the economy is directly affected by 

tax rates. Campaigns and party apparatuses have access to levels of cash-on-hand rarely seen in 

other contexts. No country’s citizens spend more on its elections than the United States. The 

campaigns of Joe Biden and Donald Trump, and their respective political parties, fundraised 

almost $4 billion during the 2020 U.S. presidential campaign.140 In weak democracies, political 

parties frequently use public and private funds to buy citizens’ votes, which is not something that 

is seen in the United States.141142143 Despite the money, prestige, and political importance at stake 

in federal elections, attempts at manipulation that would affect the market on political control have 

not been observed. 

137 Paul Rhode and Koleman Strumpf. 2005. “Manipulating Political Stock Markets: A Field Experiment and a 

Century of Observational Data.” 

138 Robin Hanson and Ryan Oprea. 2008. “A Manipulator Can Aid Prediction Market Accuracy.” Economica. 

139 Justin Wolfers and Eric Zitzewitz. 2006. “Prediction Markets in Theory and Practice”. 

140 Sean McMinn. 2020. “Money Tracker: How Much Trump And Biden Have Raised In The 2020 Election.” 

National Public Radio. 

141 Valeria Brusco, Marcelo Nazareno and Susan C. Stokes. 2004. “Vote buying in Argentina.” The Latin American 

Studies Association. 

142 Michael Bratton. 2008. “Vote buying and violence in Nigerian election campaigns.” Electoral Studies.

143 Ezequiel Gonzalez-Ocantos, Chad Kiewiet de Jonge, Carlos Meléndez, Javier Osorio, and David W. Nickerson. 

2011. “Vote Buying and Social Desirability Bias: Experimental Evidence from Nicaragua.” American Journal of 

Political Science. 
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Importantly, the fact that these contracts are already traded on Commission-sanctioned 

unregistered trading venues in the United States by Americans should demonstrate that they do 

not cause manipulation and that the markets are safe. In 2014, the Commission awarded PredictIt, 

a new unregistered trading venue dedicated to election and political event contracts, with a noaction letter. Since then, it has hosted an enormous amount of trading. As noted in the introduction, 

political control contracts on PredictIt have traded more than $100 million in volume. As of 2022, 

PredictIt has more than 250,000 registered users and more than one billion contracts traded.144145

This information--that hundreds of millions of dollars can be traded on political control contracts 

without creating manipulation concerns--was not available to the Commission the last time it 

considered similar event contracts in 2012.146 Although the Commission also awarded a no-action 

letter to another political contract trading venue, the Iowa Electronics Market, in 1992, IEM is 

smaller and harder to access for individuals not associated with the University of Iowa. Now, far 

more money is known to have been traded on election outcomes. Major reporting outlets cite 

PredictIt odds to give media consumers information about elections.147148

Americans can also readily access cryptocurrency-based decentralized exchanges (DEXes) which 

offer political control markets on platforms such as Polymarket and Omen.149150 Polymarket’s 

markets on Congressional control have traded millions.151 In total, more than half of volume ever 

traded on Polymarket (north of $50,000,000) were traded on election-related markets. These 

platforms are not registered with the Commission as Designated Contract Markets (DCMs), but 

frequently host such markets. Despite the CFTC’s January 2022 order against Polymarket, it is 

still readily accessible by Americans via VPN. There are no indications that the markets caused or 

induced an attempt to manipulate elections, let alone a successful manipulation. 

Further, as part of the Exchange’s KYC verification and monitoring system, the Exchange also 

cross-checks applicants against comprehensive databases. In particular, the Exchange will check 

whether any Members trading on this Contract are on databases of Politically Engaged Persons. 

The Exchange further cross checks applicants against databases of family members and close 

144 PredictIt. 

https://www.predictit.org/insight/aHR0cHM6Ly9hbmFseXNpcy5wcmVkaWN0aXQub3JnL3Bvc3QvMTg4NzQ3O

DgwMDQzL2EtcHJlZGljdGFibGUtbmV3c2xldHRlci0xMTExOSNtb2JpbGU=

145

 Former employee, Will Jennings’, public LinkedIn profile. https://www.linkedin.com/in/will-jennings-pi/

146 Nadex order. 2012. CFTC. 

https://www.cftc.gov/sites/default/files/idc/groups/public/@rulesandproducts/documents/ifdocs/nadexorder040212.p

df

147 Jonathan Ponciano. 2020. “Online Betting Markets Are More Bullish On A Trump Victory Than Polls, Here’s 

Why.” Forbes. 

148 Amy Tennery. 2016. “Trump's chance of victory skyrockets on betting exchanges, online market.” Reuters. 

149 Polymarket. https://polymarket.com/market/will-gavin-newsom-be-governor-of-california-on-december-31-2021

150 Omen.eth. https://omen.eth.link/#/0x95b2271039b020aba31b933039e042b60b063800/finalize

151 Polymarket. https://polymarket.com/market/will-trump-win-the-2020-us-presidential-election
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associates of Politically Engaged Persons. These checks help to further reduce the potential for 

trading violations and further increase the integrity of this Contract.

Core Principle 4 - Prevention of Market Disruption: Trading in the Contracts will be subject to 

the Rules of the Exchange, which include prohibitions on manipulation, price distortion, and 

disruption to the cash settlement process. Trading activity in the Contract will be subject to 

monitoring and surveillance by the Exchange’s Market Surveillance Department. In particular, the 

Exchange’s trade surveillance system monitors the trading on the Exchange to detect and prevent 

activities that threaten market integrity and market fairness including manipulation, price 

distortion, and disruptions of the settlement process. The Exchange also performs real-time market 

surveillance. The Exchange sets position limits, maintains both a trade practice and market 

surveillance program to monitor for market abuses, including manipulation, and has disciplinary 

procedures for violations of the Rulebook.

Core Principles 7 and 8 - Availability of General Information and Daily Publication of 

Trading Information: Core Principles 7 and 8, implemented by Regulations Sections Subsections 

38.400, 38.401, 38.450, and 38.451, require a DCM to make available to the public accurate 

information regarding the contract terms and conditions, daily information on contracts such as 

settlement price, volume, open interest, and opening and closing ranges, the rules, regulations, and 

mechanisms for executing transactions on or through the facilities of the contract market, and the 

rules and specifications describing the operation of the contract market's electronic matching 

platform. 

Rule 2.17 of the Rulebook sets forth the rules for publicizing information. The Rulebook and the 

specifications of each contract are made public on the Exchange website and remain accessible via 

the platform. The Exchange will post non-confidential materials associated with regulatory filings, 

including the Rulebook, at the time the Exchange submits such filings to the Commission. 

Consistent with Rule 2.17 of the Rulebook, the Exchange website will publish contract 

specifications, terms, and conditions, as well as daily trading volume and open interest for the 

Contract. Each contract has a dedicated “Market Page” on the Kalshi Exchange platform, which 

will contain the information described above as well as a link to the Underlying used to determine 

the Expiration Value of the Contract. Chapter 5 sets forth the rules, regulations and mechanisms 

for executing transactions, and the rules and specifications for Kalshi’s trading systems. 

Core Principle 11 - Financial Integrity of Transactions: Each Member must be in good standing 

and in compliance with the Member eligibility standards set forth in Chapter 3 of the Rulebook. 

All contracts offered by the Exchange, including the Contract, are cleared through the 

Clearinghouse, a Derivatives Clearing Organization (“DCO”) registered with the CFTC and 

subject to all CFTC Regulations related thereto. The Exchange requires that all trading be fully 

cash collateralized. As a result, no margin or leverage is permitted, and accounts must be pre-
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funded. The protection of customer funds is monitored by the Exchange and ensured by the 

Clearinghouse as “Member Property.”

All Remaining Requirements: All remaining Core Principles are satisfied through operation of 

the Exchange’s Rules, processes, and policies applicable to the other contracts traded thereon. 

Nothing in this contract requires any change from current rules, policies, or operational processes.