Prohibited Markets

Under 17 CFR 40.11, designated contract markets like Kalshi are prohibited from listing event contracts that turn on certain underlying events. These events include topics like war, assassinations, and terrorism. Generally, the CFTC maintains the right to review and prohibit any contract that it determines falls within this category as part of its "public interest review" power.

In addition, Kalshi reviews contract proposals on a case-by-case basis and makes a number of determinations not to review contracts that might be in poor taste, easily subject to manipulation, or do not have any extrinsic economic value.

Registered entities shall not list or accept agreements, contracts, or swaps that relate to terrorism, assassination, war, gaming, or activity that is unlawful under any State or Federal law. The CFTC may review any contract and, upon determining that it violates this rule, demand a registered entity suspend listing or trading on that contract immediately.

This regulation applies to all registered and regulated prediction markets. However, unregulated offshore prediction markets are not subject to these restrictions and have listed contracts that cover topics listed in 17 CFR 40.11. Some competitors of Kalshi list contracts that directly violate the CFTC's regulations. Kalshi views many of these contracts as providing bad incentives to traders and the general public and will not list these kinds of contracts on its exchange.