KalshiEX LLC

June 12, 2023

SUBMITTED VIA CFTC PORTAL

Secretary of the Commission

Office of the Secretariat

U.S. Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: KalshiEX LLC - Commission Regulation 40.2(a) Notification Regarding the

Initial Listing of the “Will <chamber of Congress> be controlled by <party> for

<term>?” Contract

Dear Sir or Madam,

Pursuant to Section 5c(c) of the Commodity Exchange Act and Rule 40.2(a) of the regulations

of the Commodity Futures Trading Commission, KalshiEX LLC (Kalshi or Exchange) hereby

notifies the Commission that it is self-certifying the “Will <chamber of Congress> be controlled

by <party> for <term>?” contract (Contract) for Commission review and approval. The

Exchange intends to list the contract on a biannual basis (every two years). The Contract’s terms

and conditions (Appendix A) include the following strike conditions:

● <party> (the political party)

● <chamber of Congress> (the House or the Senate)

● <term> (e.g. the 119th Congress)

Along with this letter, Kalshi submits the following documents:

● A concise explanation, analysis and background of the Contract;

● Certification;

● Appendix A with the Contract’s Terms and Conditions;

● Confidential Appendices with further information; and

● A request for FOIA confidential treatment.

If you have any questions, please do not hesitate to contact me.

Sincerely,

Xavier Sottile

Head of Markets

KalshiEX LLC

xsottile@kalshi.com

KalshiEX LLC
KalshiEX LLC

KalshiEX LLC

Official Product Name: Will <chamber of Congress> be controlled by <party> for <term>?

Rulebook: CONTROL

Kalshi Contract Category: Political Decision

Control of Congress

June 12, 2023

CONCISE EXPLANATION AND ANALYSIS OF THE PRODUCT AND ITS

COMPLIANCE WITH APPLICABLE PROVISIONS OF THE ACT, INCLUDING CORE

PRINCIPLES AND THE COMMISSION'S REGULATIONS THEREUNDER

Pursuant to Commission Regulation 40.2(a)(3)(v), the following is a concise explanation and

analysis of the product and its compliance with the Act, including the relevant Core Principles,

and the Commission’s regulations thereunder.

I. Introduction

The “Will <chamber of Congress> be controlled by <party> for <term>?” Contract

(Contract) is a contract relating to the partisan control of Congress.

Further information about the Contract, including an analysis of its risk mitigation and

price basing utility, as well as additional considerations related to the Contract, is

included in Confidential Appendices.

Pursuant to Section 5c(c) of the Act and CFTC Regulations 40.2(a), the Exchange hereby

certifies that the listing of the Contract complies with the Act and Commission

regulations under the Act.

General Contract Terms and Conditions: The Contract operates similar to other event

contracts that the Exchange lists for trading. The minimum price fluctuation is $0.01 (one

cent). Price bands will apply so that the Contract may only be listed at values of at least

$0.01 and at most $0.99. The Contract has a one dollar notional value and has a minimum

price fluctuation of $0.01 to be consistent with other Kalshi contracts. Contracts must be

purchased in multiples of 5,000 contracts per order. This order size is an appropriate

amount for large institutions to mitigate risk and is consistent with other futures and

derivatives products. The Exchange has further imposed position limits (defined as

maximum loss exposure) as described in Appendix A. As outlined in Rule 5.12 of the

Rulebook, trading shall be available at all times outside of any maintenance windows,

which will be announced in advance by the Exchange. Members will be charged fees in

accordance with Rule 3.6 of the Rulebook. Fees are charged in such amounts as may be

revised from time to time to be reflected on the Exchange’s Website. Additionally, as

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KalshiEX LLC

outlined in Rule 7.2 of the Rulebook, if any event or any circumstance which may have a

material impact on the reliability or transparency of a Contract’s Source Agency or the

Underlying related to the Contract arises, Kalshi retains the authority to designate a new

Source Agency and Underlying for that Contract and to change any associated Contract

specifications after the first day of trading. That new Source Agency and Underlying

would be objective and verifiable. Kalshi would announce any such decision on its

website. All instructions on how to access the Underlying are non-binding and are

provided for convenience only and are not part of the binding Terms and Conditions of

the Contract. They may be clarified at any time. Furthermore, the Contract’s payout

structure is characterized by the payment of an absolute amount to the holder of one side

of the option and no payment to the counterparty. During the time that trading on the

Contract is open, Members are able to adjust their positions and trade freely. After trading

on the Contract has closed, the Expiration Value and Market Outcome are determined.

The market is then settled by the Exchange, and the long position holders and short

position holders are paid according to the Market Outcome. In this case, “long position

holders” refers to Members who purchased the “Yes” side of the Contract and “short

position holders” refers to Members who purchased the “No” side of the Contract. If the

Market Outcome is “Yes” (please see Appendix A for the conditions upon which the

Market Outcome is “Yes”), then the long position holders are paid an absolute amount

proportional to the size of their position and the short position holders receive no

payment. If the Market Outcome is “No,” then the short position holders are paid an

absolute amount proportional to the size of their position and the long position holders

receive no payment. Specification of the circumstances that would trigger a Market

Outcome of “Yes” are included below in the section titled “Payout Criterion” in

Appendix A. The Expiration Date of the Contract is designed to account for multiple

possible contingencies regarding the timing of the determination of control of a given

chamber of Congress.

KalshiEX LLC
KalshiEX LLC

CERTIFICATIONS PURSUANT TO SECTION 5c OF THE COMMODITY EXCHANGE

ACT, 7 U.S.C. § 7A-2 AND COMMODITY FUTURES TRADING COMMISSION RULE

40.2, 17 C.F.R. § 40.2

The Exchange certifies that this submission (other than those appendices for which confidential

treatment has been requested) has been concurrently posted on the Exchange’s website at

https://kalshi.com/regulatory/filings.

Should you have any questions concerning the above, please contact the exchange at

ProductFilings@kalshi.com.

______________________

By: Xavier Sottile

Title: Head of Markets

Date: June 12, 2023

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KalshiEX LLC

Attachments:

Appendix A - Contract Terms and Conditions

Appendix B - Trading Prohibitions

Index of confidential appendices

Confidential appendices

KalshiEX LLC
KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONS

Official Product Name: Will <chamber of Congress> be controlled by <party> for <term>?

Rulebook: CONTROL

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KalshiEX LLC

CONTROL

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is the political party membership of each Member

of Congress for <term>, as well as the political party membership of the Speaker of the House

and the political party membership of the President Pro Tempore, according to congress.gov. The

Exchange will also consider the caucus decisions of Independent members. Revisions to the

Underlying made after Expiration will not be accounted for in determining the Expiration Value.

Source Agency: The Source Agency is congress.gov.

Type: The type of Contract is an Event Contract.

Issuance: The Contract is based on the outcome of a recurrent data release, which is issued for

each new term of Congress. Thus, Contract iterations will be issued on a recurring basis, and

future Contract iterations will generally correspond to the next election cycle.

<chamber of Congress>: refers to a chamber of the United States Congress. It can take the

value of “U.S. House of Representatives” or “U.S. Senate”.

<term>: refers to a term of the United States Congress. A term of Congress begins and ends

every two years.

<party>: refers to a political party.

Payout Criterion: The Payout Criterion for the Contract encompasses the Expiration Values

where the leader of <chamber of Congress> is a member of <party> on the Expiration Date. In

the case of the U.S. House of Representatives, this is the Speaker of the House. In the case of the

U.S. Senate, this is the President Pro Tempore.

Minimum Tick: The Minimum Tick size for the referred Contract shall be $0.01.

Position Limit: The Position Limit for the $1 referred Contract shall be as follows:

● The Position Limit for Individuals shall be $125,000 per Member; and $250,000 for those

with demonstrated established economic hedging need

● The Position Limit for Entities shall be $5,000,000 per Member; and $10,000,000 for

those with demonstrated established economic hedging need

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KalshiEX LLC

● The Position Limit for Eligible Contract Participants (“ECP”) shall be $50,000,000 per

Member; and $100,000,000 for those with demonstrated established economic hedging

need

Established economic hedging need may be demonstrated to Kalshi according to the means and

methods established by Kalshi. Whether a member has demonstrated that it has a sufficiently

established economic hedging need is determined solely at Kalshi’s discretion.

Last Trading Date: The Last Trading Date of the Contract will be the same as the Expiration

Date. The Last Trading Time will be the same as the Expiration Time.

Settlement Date: The Settlement Date of the Contract shall be no later than the day after the

Expiration Date, unless the Market Outcome is under review pursuant to Rule 7.1.

Expiration Date: The Expiration Date of the Contract shall be February 1 in the year that

<term> begins.

Expiration time: The Expiration time of the Contract shall be 10:00 AM ET.

Settlement Value: The Settlement Value for this Contract is $1.

Order Size: Contracts must be purchased in multiples of 5,000 contracts per order.

Expiration Value: The Expiration Value is the value of the Underlying as documented by the

Source Agency on the Expiration Date at the Expiration time.

Contingencies: Before Settlement, Kalshi may, at its sole discretion, initiate the Market

Outcome Review Process pursuant to Rule 6.3(c) of the Rulebook. Additionally, as outlined in

Rule 7.2 of the Rulebook, if any event or any circumstance which may have a material impact on

the reliability or transparency of a Contract’s Source Agency or the Underlying related to the

Contract arises, Kalshi retains the authority to designate a new Source Agency and Underlying

for that Contract and to change any associated Contract specifications after the first day of

trading.

Trading Prohibitions: In addition to the general trading prohibitions found in Kalshi’s

Rulebook, the following are prohibited from trading this contract:

● Candidates for federal or statewide public office. Please note that this prohibition applies

to more than just candidates for Congress.

● Paid campaign staffers on Congressional campaigns.

● Paid employees of Democratic and Republican Party organizations, such as the

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KalshiEX LLC

Democratic Congressional Campaign Committee or the Republican National Committee.

● Paid employees of Political Action Committees (PACs) and “Super PACs” (independent

expenditure only political committees).

● Paid employees of major polling organizations. This prohibition does not apply to all

employees of an organization that contains a polling division (e.g. the prohibition does

not apply to all employees of Quinnipiac University despite the presence of Quinnipiac

University’s polling division). The Exchange shall determine which polling organizations

constitute “major” and may modify that determination at any time.

● Existing members of Congress, including those not running for re-election.

● Existing paid staffers of members of Congress.

● Household members and immediate family family members (siblings, children, and

parents) of any of the above.

● Any of the above listed institutions themselves.

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KalshiEX LLC

APPENDIX B – TRADING PROHIBITIONS

In addition to the general prohibition against trading on material nonpublic information, the

Exchange will be instituting additional prohibitions for trading the CONTROL contract. The

following individuals and entities will be prohibited from trading:

● Candidates for federal or statewide public office. Please note that this prohibition applies

to more than just candidates for Congress.

● Paid campaign staffers on Congressional campaigns.

● Paid employees of Democratic and Republican Party organizations, such as the

Democratic Congressional Campaign Committee or the Republican National Committee.

● Paid employees of Political Action Committees (PACs) and “Super PACs” (independent

expenditure only political committees).

● Paid employees of major polling organizations. This prohibition does not apply to all

employees of an organization that contains a polling division (e.g. the prohibition does

not apply to all employees of Quinnipiac University despite the presence of Quinnipiac

University’s polling division). The Exchange shall determine which polling organizations

constitute “major” and may modify that determination at any time.

● Existing members of Congress, including those not running for re-election.

● Existing paid staffers of members of Congress. Household members and immediate

family members (siblings, children, and parents) of any of the above.

● Any of the above listed institutions themselves.

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