Kalshi Asks SEC to Slow Product Launches From Rival Cboe

Prediction market Kalshi reportedly wants federal regulators to delay products from rival Cboe Global Markets.

That’s according to a report Tuesday (Aug. 25) from Bloomberg News, which calls this the latest example of the growing friction between prediction markets and incumbent financial exchanges.

The report said Kalshi wrote this month to the Securities and Exchange Commission (SEC), asking the commission to hold off new binary options contracts related to specific line items in corporate earnings reports, an offering that would compete with some of the event contracts that Kalshi now offers.

As Bloomberg notes, this dispute is an inversion of an early industry debate, in which Cboe and CME Group contended that products from the likes of Kalshi have been OK’d too quickly by the Commodity Futures Trading Commission (CFTC).

Speaking at a CFTC event last week, Cboe CEO Craig Donohue said the regulator has made a perilous move by taking responsibility for some prediction market products that he said should be considered securities and governed by the SEC, the report added.

“Those are risks that don’t promote safety and soundness,” Donohue said. “They don’t protect customers, and they do the opposite of what I think the spirit of this whole meeting today is to do, which is foster legal certainty and protect customers, give them a safe environment to execute.”

Kalshi Co-Founder Luana Lopes Lara was also present at the CFTC roundtable, where she sparred with CME CEO Terry Duffy over prediction markets regulation.

Duffy had mocked the economic significance of some Kalshi offerings, like a contract related to Nathan’s Famous Hot Dog Eating Contest. Lara countered by challenging CME’s record.

“Has CME ever had any issues with any market manipulation, any issues ever in its history?” she asked.

Duffy countered that CME had more employees in its regulatory department than Kalshi had in its entire staff. Lara responded that CME might need to “learn a bit about efficiency,” leading Duffy to suggest Kalshi should “learn about credible markets.”

As PYMNTS wrote about the event, the roundtable showed the central question facing the industry is no longer just whether prediction markets need to be regulated.

“It is whether they should be held to the established derivatives framework, subjected to additional product-specific restrictions, or governed partly by state gambling standards,” that report said. “The answer will determine both the breadth of the CFTC’s authority and how quickly prediction markets can continue expanding.”