The Closing Bell: Kalshi Nears $700M In Trading Volume Over Past Week
Roundup: Report says Kalshi, Polymarket were kicking tires on Novig; Prediction market CEOs Shayne Coplan and Tarek Mansour will attend SEC-CFTC roundtable
How is trading volume trending at Kalshi since the start of football season?
For the trailing seven days, Kalshi has hit $673 million in volume; 91% of it is on sports events. Here’s a look at daily volume since Sept. 4, the first day of the NFL season:
Volume is growing, certainly; you can see the spikes on Saturdays and Sundays. But the growth is not exactly exponential right now, either.
For the previous seven days, volume was $661 million, an increase of only $12 million vs. the current week. That’s despite more of Kalshi’s markets being available at Robinhood, like point spreads and totals for football.
If you go back seven days more, volume was at $555 million. Growth came quickly with the launch of football markets, but since then, volume has only grown about 20% from that first full week of football to today.
Maybe it’s a one-off and we get back to more organic growth next week, but at this stage in the life cycle of Kalshi, one would expect the growth line to be steeper.
Like sportsbooks, Kalshi is very much dependent on the calendar, what sports events are happening on any given day, and how interesting they are. The NBA, college basketball and NHL seasons are looming, and we’re going to see another spike once those markets start up.
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Prediction markets roundup
What I wrote this week. If you read it all, skip to the next section!
PrizePicks Wins CFTC Approval, Could Enter Prediction Markets Soon
The Takeaway: The Double-Edged Sword Of Prediction Markets Going Mainstream
Episode 1: The Intersection Of Crypto + Prediction Markets In The US
Episode 36: Everyone Should Operate A Prediction Market Tomorrow
Kalshi Posts Then Deletes Content Encouraging ‘Kalshi U’ Clubs On College Campuses
Kalshi, Polymarket Sought to Buy Prediction-Market Platform Novig (Front Office Sports): “Novig, the prediction-market platform that raised $18 million over the summer, has been approached by multiple suitors interested in buying the company in recent weeks, including Kalshi and Polymarket, Front Office Sports has learned. It’s not clear whether any formal offers were made, and the other companies that made approaches were not identified. Novig isn’t actively for sale, a source familiar with the matter tells FOS.”
“Kalshi has no plans for any acquisitions at the moment,” a spokesperson for the company tells FOS.
My take: I would
bettrade a lot of money that this leaked from someone with a vested interest in Novig, rather than anyone at Kalshi or Polymarket, knowing how these things usually get into the public. This probably would have made sense before that Novig raise, but probably less so today. But who knows, everything is moving fast in prediction markets.Why would one of the big PMs want to acquire Novig? I don’t think it would make a ton of sense, but you can squint and see reasons…first it’s a bunch of people who know sports, which is not the ethos of either Polymarket or Kalshi. Could either continue to (or even want to) operate a sweepstakes-based B2C sportsbook while trying to build their own B2C brands in the US? That would be something. (Novig also aspires to become a CFTC-regulated prediction market.)
In the grand scheme of things, everyone is talking to everyone, always. So tire-kicking in any shape or form shouldn’t shock anyone.
SEC Chair a no-go for CFTC (Punchbowl News): “Washington financial policy circles are aflutter with speculation about who will lead the commodities regulator since original Trump administration nominee Brian Quintenz has stalled out.”
“Atkins wants to make clear that, despite some recent reports that his name has been considered as CFTC chair, he is not interested. (In fairness, it wouldn’t be the first time the Trump administration asked its officials to wear multiple, big hats.)”
“Thanks but no thanks,” Atkins told us. “The real issue is harmonization of the CFTC and SEC as a way forward, and not a merger.”
Agenda, Panelists for SEC-CFTC Roundtable on Regulatory Harmonization Efforts Announced: Folks from the prediction markets industry will get their voices heard in this, with both Kalshi’s and Polymarket’s CEO appearing. From the press release:
“WASHINGTON — The Commodity Futures Trading Commission and the Securities and Exchange Commission have announced the agenda and panelists for their joint Sept. 29 roundtable on regulatory harmonization efforts.
The roundtable, announced earlier this month, will be held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., from 1 p.m. to 5:30 p.m. The event will be open to the public and webcast live on the SEC’s website. Doors will open at noon.
For online attendance, registration is not necessary. A webcast will be available on the roundtable webpage. For in-person attendance, please register in advance. …
2:10 p.m. – Panel 2: Platforms: This panel will focus on how regulatory harmonization efforts could unlock economic value for platforms while continuing to protect investors.
Moderators:
Jill Sommers, Former CFTC Commissioner
Jamie Selway, SEC Division of Trading and Markets Director
Panelists:
Shayne Coplan, Polymarket
Craig Donohue, Cboe Global Markets
Terrence Duffy, CME Group
Adena Friedman, Nasdaq
Tarek Mansour, Kalshi
Arjun Sethi, Kraken
Jeffrey Sprecher, Intercontinental Exchange (ICE)
Don Wilson, DRW Holdings
4 p.m. – Panel 3: Participants: This panel will focus on how regulatory harmonization efforts could increase choice for market participants and reduce costs for investors.
Moderators:
J. Christopher Giancarlo, Former CFTC Chairman
Troy Paredes, Former SEC Commissioner
Panelists:
Stephen Berger, Citadel
Ryan Louvar, WisdomTree
Nick Lundgren, Crypto.com
JB Mackenzie, Robinhood Markets
Dave Olsen, Jump Trading Group
Sonali Theisen, Bank of America
Brad Tulley, J.P. Morgan
What is going on with FCMs?: It’s clear that there’s something going on behind the scenes with the CFTC and its futures commission merchants, which is one possible way to get into the prediction markets space. If you’re an FCM, you can work with a designated contract market. This is how Robinhood works Kalshi, for instance.
While there are several FCMs pending with sports and fantasy entities, PrizePicks somehow emerged from the pack as the first and only company to get approval as an FCM, so far. DraftKings and Sleeper are still on the sidelines. Sleeper, of course, is at odds with the CFTC, with a lawyer sending a scathing letter accusing the commission of violating the law. (That lawyer is Josh Sterling, the same person who is reportedly being vetted to lead the CFTC.)
The big questions are PrizePicks’ intentions in the prediction markets space — are they just being prepared or are they actively getting ready to launch? — and whom they will partner with.
Massachusetts legal wranglings: This week, Massachusetts has filed a motion to send the Kalshi case back to state court. If you’re playing catch-up, the attorney general there is suing Kalshi for offering sports betting without a license in state court, and Robinhood is trying to get the case moved to federal court. It’s a big mess. Analysis of Kalshi’s filing from attorney Andrew Kim in a thread on Twitter:
Massachusetts starts off by noting that complete preemption requires Kalshi to show that Congress wanted to provide an “exclusive federal cause of action,” such that a state-law claim *has to be* a federal claim. So far, so good.
But then, MA starts to go off on a tangent by making arguments about state authority, and how Congress didn’t intend to “impose federal regulation over sports wagering.” In doing so, it’s answering the wrong question.
Complete preemption is about whether a cause of action, i.e., the legal theory by which you sue someone, *has to be based on federal law*. The boundaries of state authority might be important to that analysis, but the ? here is **not** “who has power, the CFTC or the states.”
By pursuing this line of argument, MA might’ve opened the door for Kalshi to turn this jurisdictional fight into the same fight that it’s had in New Jersey, Nevada, and Maryland — a fight for which Kalshi is much better prepared.
I mean, MA stresses that complete preemption =/= ordinary preemption, but it’s making ordinary preemption arguments.
The AG does, however, eventually course correct, focusing on whether the CEA prescribes an exclusively federal cause of action, i.e., whether the CEA was intended to be the only way to sue about what MA describes as unlicensed sports wagering.
MA also says Kalshi lacked an “objectively reasonable basis for seeking removal” and asks for costs/expenses (not fees, which the statute authorizes — maybe because state AAGs don’t bill by the hour...).
Prediction markets — everything you need to know (A16zcrypto): “Prediction markets are a hot topic again — even cartoon characters are talking about them (cf South Park). But beyond the buzz, what is a prediction market, exactly? How do they work, how are they designed, and what makes them work? We answer all these questions and more in this deep-dive featuring experts Alex Tabarrok (professor of economics at George Mason University) and Scott Kominers (a16z crypto research partner and Harvard Business School professor), in conversation with Sonal Chokshi. While we originally covered this topic during last year’s election, the discussion is more relevant than ever today, as we go into the claims people make about prediction markets — what they’re good for (and not); how they fit in with other trends like AI, futarchy, and the crisis in scientific publishing; and where blockchains and crypto come in.”
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