KalshiEX LLC

September 7, 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 – CFTC Regulation 40.2(a) Notification Regarding the Initial Listing

of the “Will parameters in GPT-4 be above <count>?” Contract

Dear Sir or Madam,

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

Commodity Futures Trading Commission, KalshiEX LLC (Kalshi) hereby notifies the Commission that

it is self-certifying the “Will parameters in GPT-4 be above <count>?” contract (Contract). The Exchange

intends to list the contract on a custom basis. The Contract’s terms and conditions (Appendix A) includes

the following strike conditions:

● <date> (the target date)

● <count> (the target number of parameters)

Along with this letter, Kalshi submits the following documents:

● A concise explanation and analysis 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 parameters in GPT-4 be above <count>?

Rulebook: GPTPARAM

Kalshi Contract Category: Science/Technology

GPT-4 Parameter Number

September 7, 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 Rule 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 parameters in GPT-4 be above <count>?” Contract is a contract relating to the 

size of GPT-4, OpenAI’s latest large language model. After careful analysis, Kalshi 

(hereafter referred to as “Exchange”) has determined that the Contract complies with its 

vetting framework. 

The number of parameters inside of large language models is a critical determinant in 

their production and production cost. It is expected that OpenAI will release 

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 B, C, and D. 

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 Contracts may only be listed at values of at least 

$0.01 and at most $0.99. Further, the Contract is sized with a one-dollar notional value 

and has a minimum price fluctuation of $0.01 to enable Members to match the size of the 

contracts purchased to their economic risks. The Exchange has further imposed position 

limits (defined as maximum loss exposure) of $25,000 USD on the Contract. As outlined 

in Rule 5.12 of the Rulebook, trading shall be available at all times outside of any 

KalshiEX LLC 
KalshiEX LLC

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. A new Source Agency can be added via a Part 40 amendment. 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,” meaning 

that the number of parameters in GPT-4 is above <count>, 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. 

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 

Based on the above analysis, the Exchange certifies that: 

❏ The Contract complies with the Act and Commission regulations thereunder. 

❏ 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: September 7, 2023 

KalshiEX LLC 
KalshiEX LLC

Attachments: 

Appendix A - Contract Terms and Conditions 

Appendix B (Confidential) - Further Considerations 

Appendix C (Confidential) - Source Agency 

Appendix D (Confidential) - Compliance with Core Principles 

KalshiEX LLC 
KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONS 

Official Product Name: Will parameters in GPT-4 be above <count>? 

Rulebook: GPTPARAM 

KalshiEX LLC 
KalshiEX LLC

GPTPARAM 

Scope: These rules shall apply to this contract. 

Underlying: The Underlying for this Contract is releases from OpenAI between Issuance and 

<date>. Revisions to the Underlying made after Expiration will not be accounted for in 

determining the Expiration Value. 

Instructions: OpenAI’s website can be found here . 

1 These instructions on how to access the 

Underlying 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. 

Source Agency: The Source Agency is OpenAI. 

Type: The type of Contract is an Event Contract. 

Issuance: After the initial Contract, Contract iterations will be listed on an as-needed basis at the 

discretion of the Exchange and corresponding to the risk management needs of Members. 

<count>: Kalshi may list iterations of the Contract with <count> levels that fall within an 

inclusive range between 0 and 1,000,000,000,000,000 at consecutive increments of <1>. Due to 

the potential for variability in the Underlying, the Exchange may modify <count> levels in 

response to suggestions by Members. 

<date> : <date> refers to a calendar date specified by Kalshi. Kalshi may list iterations of the 

Contract corresponding to different statistical periods of <date>. 

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

the number of parameters in any version of GPT-4 are above <count>. For example, if OpenAI 

announced that they have two versions of GPT-4, one with 500 billion and one with 1 trillion 

parameters, then a market with a <count> of 900 billion would resolve Yes. 

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 $25,000 per Member. 

Last Trading Date: The Last Trading Date of the Contract will be the sooner of the date of the 

first 10:00 AM ET following the occurrence of an event encompassed by the Payout Criterion 

1 https://openai.com/

KalshiEX LLC 
KalshiEX LLC

(whereupon the Last Trading Time will be 10:00 AM ET) or <date> (whereupon the Last 

Trading Time will be 11:59 PM ET). 

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 the sooner of the date of the first 

10:00 AM ET following the occurrence of an event that is encompassed in the Payout Criterion 

or the date of the first 10:00 AM ET following the <date>. 

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

Settlement Value: The Settlement Value for this Contract is $1.00. 

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. 

KalshiEX LLC