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Kalshi Requests US Approval for Margin Trading in Prediction Markets

Markets

Business Honor
06 Febuary, 2026

Kalshi plans margin trading approval from CFTC, aiming to attract institutional investors and expand prediction markets.

Kalshi, a prediction market operator, intends to seek approval from US regulators to offer margin trading, thereby evolving towards a traditional finance model. If successful, this could have a considerable impact on the way institutional investors utilize event contracts, making prediction markets increasingly similar to typical trading on the world’s financial markets.

According to insiders, Kalshi has held discussions with the CFTC (Commodity Futures Trading Commission) about providing margin trading. The approval represents a significant change for the industry because all event contracts have been required to have their entire position funded via cash collateral upfront. Due to this structure, there has been limited participation by hedge funds and other large-scale asset managers. With margin trading, a trader only needs to place a cash deposit against the amount they intend to place on a particular event contract. Sources suggest that, initially, Kalshi would impose restrictions on margin access to institutional clients only, to reflect caution from regulators and to ensure that adequate risk controls are in place.

The pending approval demonstrates how the regulatory landscape for prediction markets has progressed from being conceptually "niche" or "novelty" wagering platforms to now covering the world of finance, the world of politics and government, and the world of sports. Since the United States held a presidential election in 2024, billions of dollars have been traded on prediction markets such as Kalshi and Polymarket. However, larger investors have been cautious about trading because they are facing liquidity constraints and limitations on their ability to trade because of capital constraints.

The regulators seem to be showing a willingness to accept new ideas. The CFTC chair, who has been appointed by Donald Trump, has rolled back restrictions on political and sports related prediction market contracts that were envisioned before he took office, while simultaneously confirming there is an interest in allowing new prediction market contracts through legalized innovation. As financial markets become increasingly driven by data and forecasting, event-based prediction markets may evolve from the realm of speculative investment to the center of financial market innovation by 2026.