Kalshi, the event trading and futures platform, has introduced a range of new user protections following criticism from Major League Baseball (MLB) and regulators in Nevada over inadequate safeguards.
Launched during the 2024 US Election, Kalshi was heavily criticised for its weak controls on insider trading, which were seen as a threat to sports integrity.
New Customer Protection Hub
Kalshi has introduced a new “Customer Protection Hub” to improve user safety. The hub includes:
- Voluntary opt-outs – Allows users to opt out of trading entirely.
- Self-imposed trading breaks – Enables users to control and regulate their trading activity.
- Self-imposed deposit caps – Similar to safeguards used by FanDuel and DraftKings, this feature limits how much a user can deposit.
To strengthen these protections, Kalshi has partnered with Integrity Compliance 360 to monitor suspicious activity and prevent insider trading. The partnership will block compromised individuals, such as athletes and coaches, from accessing the platform.
Despite introducing these new protections, Kalshi has chosen to keep the minimum age for users at 18, rejecting calls to raise it to 21.
MLB and Regulatory Scrutiny
On 7 March, MLB submitted a letter to the Commodity Futures Trading Commission (CFTC), arguing that Kalshi lacks sufficient measures to prevent insider trading. Bryan Seeley, MLB’s Executive VP of Legal and Operations, stated that as sports futures increasingly resemble traditional sports betting, they should meet similar consumer protection standards.
On 4 March, the state of Nevada accused Kalshi of operating an unregulated gambling platform and issued a cease-and-desist order. Kalshi denied the accusation and has not confirmed whether it will comply. The Nevada Gaming Control Board granted a one-week extension, setting a new deadline of 14 March 2023 for Kalshi to stop operations in the state.
Political Ties and Regulatory Environment
The CFTC is expected to take a hands-off approach when it reviews futures trading policy in April.
Awaiting key judgements the Kalshi CEO Tarek Mansour announced a ‘strengthening of corporate governance’, confirming the appointments of Donald Trump Jr as a new director.
Furthermore, Brian Quintenz, a Trump administration nominee for CFTC chairman, sits on Kalshi’s board of directors.
The Trump administration plans to reset the CFTC)regulatory stance on event trading as a commodity.
The Acting President Caroline Pham criticised the previous approach as a “regulatory sinkhole.” She emphasised that prediction platforms represent an important new frontier that can harness market forces to anticipate probabilities adding “past hostilities need to be resolved” to create a more effective regulatory environment.
Kalshi stands by business without interruptions
Kalshi insists that the new safety measures are part of its long-term strategy, not a reaction to regulatory pressure. A company representative said the goal is to provide traders with every possible safety feature.
Kalshi continues to offer sports-related contracts, including futures on the 2025 March Madness tournament, despite Nevada’s cease-and-desist order. The company has not disclosed whether it plans to comply with Nevada’s demands.
