KalshiEX LLC

KalshiEX LLC

7/19/2022

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 40.3(a), Voluntary submission of 

new products for Commission review and approval, regarding the “Will <party> 

be in control of the <chamber of Congress>?” Contract

Dear Sir or Madam, 

Pursuant to Section 5c(c) of the Commodity Exchange Act and Rule 40.3(a) of the regulations of 

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

voluntarily submits the new “Will <party> be in control of the <chamber of Congress>?” 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 118th 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, 

Elie Mishory

Chief Regulatory Officer 

KalshiEX LLC 

emishory@kalshi.com
KalshiEX LLC

KalshiEX LLC

KalshiEX LLC

Official Product Name: Will <party> be in control of the <chamber of Congress>?

Rulebook: CONGRESS

Kalshi Contract Category: Political Decision

Control of Congress

7/19/2022

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 40.3(a)(4), 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 <party> win <chamber of Congress>?” Contract (Contract) is a contract relating 

to the partisan control of Congress.

Contracts on political control of Congress available to US participants have been trading 

for nearly a decade. Since 2014, a similar contract has been available for trading on an 

unregistered trading venue that purports to operate under a No-Action Letter that was 

issued by the Division of Market Oversight in 2014 and granted relief to operate without 

complying with a number of aspects of the Commodity Exchange Act and Commission 

Regulations. 

The Exchange is proposing to bring such contracts onto a fully regulated exchange 

operating under the core principles applicable to a DCM, with participant funds 

safeguarded at a DCO operating under the core principles applicable to a DCO. The 

Exchange believes it is time to offer these widely used but unregulated contracts on a fully 

regulated basis so that U.S. persons can hedge risks arising from political control on a 

market with robust safeguards and transparency. 

In the 2018 cycle, the following contracts were traded, and had the following number of 

contracts traded1, as stated by that unregistered trading venue:

1 The volume numbers in the following tables are rounded. 
KalshiEX LLC

KalshiEX LLC

● Control of the Senate 1,600,000 contracts traded

● Control of the House 4,600,000 contracts traded

● Control of Congress 2,900,000 contracts traded

● Number of Republican 

seats in the Senate 

19,400,000 contracts traded

● Number of Republican 

seats in the House

8,100,000 contracts traded

● Number of Democrat seats 

in the House

6,300,000 contracts traded

In the 2020 cycle, the following contracts were traded, and had the following volume, as 

stated by that unregistered trading venue:

● Control of the Senate 13,800,000 contracts traded

● Control of the House 7,500,000 contracts traded

● Control of Congress 29,200,000 contracts traded

● Number of Democrat seats 

in the House

6,300,000 contracts traded

For the current cycle, the following contracts are trading, and had the following volume, 

as stated by that unregistered trading venue on July 19, 2022:

● Control of the Senate 1,300,000 contracts traded

● Control of the House 1,800,000 contracts traded

● Control of Congress 2,400,000 contracts traded

● Senate Majority Leader 183,000 contracts traded 

● Speaker of the House 2,500,000 contracts traded
KalshiEX LLC

KalshiEX LLC

● Number of Republican 

seats in the Senate 

1,700,000 contracts traded

In total, approximately 110,000,000 contracts have traded on political control on this 

unregistered trading venue2since the 2018 cycle. 

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. 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 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 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,” 

2 As stated by the unregistered trading venue. 
KalshiEX LLC

KalshiEX LLC

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 40.3, 17 C.F.R. § 40.3

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: Eliezer Mishory

Title: Chief Regulatory Officer 

Date: 7/19/2022
KalshiEX LLC

KalshiEX LLC

Attachments:

Appendix A - Contract Terms and Conditions

Index of confidential appendices

Confidential appendices
KalshiEX LLC

KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONS

Official Product Name: Will <party> be in control of the <chamber of Congress>?

Rulebook: CONGRESS
KalshiEX LLC

KalshiEX LLC

CONGRESS

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. For the 

purposes of assigning party membership: Senator Angus King of Maine and Senator Bernard 

Sanders of Vermont shall be treated as members of the Democratic Party. 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. For the 118th Congress, the Exchange will list contract 

iterations with “Democratic Party” or “Republican Party” values. 

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 $25,000 per Member.

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.
KalshiEX LLC

KalshiEX LLC

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 $1.00.

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. 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.