Questions on the KalshiEX LLC “Will <chamber of Congress> be controlled by <party> 

for <term>?” Contracts for Public Comment

1. Do these contracts involve, relate to, or reference gaming as described in Commission 

regulation 40.11(a)(1) and section 5c(c)(5)(C) of the Commodity Exchange Act, or in the 

alternative, involve, relate to, or reference an activity that is similar to gaming as 

described in Commission regulation 40.11(a)(2) and section 5c(c)(5)(C) of the 

Commodity Exchange Act? 

 

2. What role does the requirement that the contracts trade in multiples of 5000 and/or the 

position limits applicable to the contracts play in the analysis of whether the contracts

involve, relate to, or reference gaming as described in Commission regulation 40.11(a)(1) 

and section 5c(c)(5)(C) of the Commodity Exchange Act? Are the position limits 

reasonably enforceable?

3. Should the Commission consider whether similar offerings are available in traditional 

gaming venues such as casinos or sports books and/or whether taking a position on 

elections or congressional control is defined as gaming under state or federal law? 

4. Do these contracts involve, relate to, or reference “an activity that is unlawful under any 

State or Federal law” as described in Commission regulation 40.11(a)(1) and section 

5c(c)(5)(C) of the Commodity Exchange Act? 

5. In determining whether these contracts involve an activity that is unlawful under any 

State or Federal law, should the Commission be influenced by whether state laws permit 

betting on the outcome of elections or other political outcomes and/or by the prohibition 

of interstate betting under Federal law?

 

6. Are the contracts substantively different from Nadex’s previously proposed political 

event contracts such that the Commission’s analysis should be different? For reference, 

please see “CFTC Order Prohibiting North American Derivatives Exchange’s Political 

Event Derivatives Contracts” (Apr. 2, 2012), available at 

https://www.cftc.gov/PressRoom/PressReleases/6224-12. 

 

7. Are the contracts substantively different from Kalshi’s previously proposed, and 

withdrawn, congressional control contracts? For reference, please see “CFTC Announces 

Review and Comment Period of KalshiEX Proposed Congressional Control Contracts 

Under CFTC Regulation 40.11” (August 26, 2022), available at 

https://www.cftc.gov/PressRoom/PressReleases/8578-22. 

 

8. Do the contracts serve a hedging function? What standard should be used in reviewing 

the contracts’ hedging function? Is it sufficient that a contract could theoretically be used 

for hedging, or should an exchange provide evidence of demonstrated need by likely 

hedgers in the market? How often must a contract be used for hedging or what 

percentage of market participants or open interest must represent hedging use in order for 

a contract to serve a hedging function? 
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9. Are there unique economic risks tied to the outcome of congressional control that cannot 

be hedged via derivative products on equities, debt, interest rates, tax rates, asset values, 

and other commodity prices? 

10. Are the economic consequences of congressional control predictable enough for a 

contract based on that control to serve a hedging function? Please provide tangible 

examples of commercial activity that can be hedged directly by the contracts or economic 

analysis that demonstrates the hedging utility of the contracts. 

11. Should the Commission consider contract and position sizes, size of trade requirements,

and/or an exchange’s intended customer base to help assess whether a contract is likely to 

be used for hedging in at least some cases? Does the requirement that all contracts listed 

on Kalshi must be fully-collateralized affect this analysis? Does the requirement that 

these contracts trade in multiples of 5000 and/or the position limits applicable to the 

contracts affect the analysis of the hedging utility of the contracts?

12. Should the Commission consider the contract design and payout to help assess the 

hedging utility of the contract? For example, are binary contracts useful for hedging 

nonbinary economic events? 

13. Do the contracts serve a price-basing function? For example, could they form the basis 

of pricing a commercial transaction in a physical commodity, financial asset, or service?

14. Are the contracts contrary to the public interest? Why or why not? 

15. Could the trading of these or other political control or election-based contracts affect the 

integrity of elections or elections within a chamber of Congress? Could they affect the 

perception of the integrity of elections or elections within a chamber of Congress? 

16. Could the contracts be used to influence perception of a political party or its candidates’ 

likelihood of success? To this end, could the contracts be used to manipulate fundraising 

or voting? 

17. Could the contracts facilitate violations of, or otherwise undermine, federal campaign 

finance laws or regulations? For example, could the contracts make it easier to sidestep 

prohibitions governing coordination between candidate campaign committees and 

political action committees? 

18. Do the contracts present any special considerations with respect to susceptibility to 

manipulation or surveillance requirements? 

19. What is the price forming information for these contracts while the contracts are trading? 

If the price forming information includes polling and other election prediction 

information, is that information regulated? How does the price forming information 

compare to informational sources (e.g. government issued crop forecasts, weather 

forecasts, federal government economic data, market derived supply and demand metrics 
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for commodities, market-based interest rate curves, etc.) that are generally used for 

pricing commodity derivative products within the Commission’s jurisdiction? 

20. Should, and if so how would, the registered entity listing the contracts take steps to 

address possible manipulative and/or false reporting activity involving the price forming 

information for the contracts, while the contracts are trading? 

21. Do Kalshi’s limitations on market participation affect the susceptibility of the contracts 

and/or markets for the contracts to manipulation? Do the limitations affect the extent to 

which these markets could be used to influence perception of a political party or 

candidate or otherwise be implicated in attempted election manipulation? Are the 

limitations reasonably enforceable? 

22. Should the Commission be responsible for surveilling, and enforcing against, possible 

manipulative and/or false reporting activity involving the price forming information for 

the contracts, while the contracts are trading? 

23. Could trading in the markets for the contracts obligate the Commission to investigate or 

otherwise become involved in the electoral process or political fundraising? If so, is this 

an appropriate role for the Commission? 

24. What other factors should the Commission consider in determining whether these 

contracts are “contrary to the public interest?”