What's KALSHI: Definition and Basics for Traders
What’s Kalshi? Kalshi is a U.S.-based, regulated prediction-market venue where traders buy YES or NO shares on the outcome of real-world events. It operates as a Designated Contract Market under CFTC oversight and settles each contract to $1.00 if the prediction is correct. Each event contract is binary, with a fixed $1 payoff for the winning side and $0 for the loser. This article explains the definition and the core mechanics so you know what you’re dealing with before you trade.
What is Kalshi?
Kalshi is a federally regulated exchange that offers event contracts in a binary YES or NO format. Each contract represents a real-world outcome and has a settlement value of $1.00 for the winning side and $0.00 for the losing side. The platform uses a centralised order book and a clearinghouse to manage trades and settlement, with USD as the settlement asset. Users must meet basic account requirements and complete KYC to participate.
How do Kalshi contracts work?
Every market on Kalshi has two sides: YES and NO. The prices are quoted in cents and must sum to $1.00 in fair value. If you buy YES at 42¢ and the event resolves true, you receive $1.00 per contract; if it resolves false, you lose your 42¢. Beyond the binary payoff, the platform imposes standard trading fees and uses a written resolution rule (data source and threshold) to settle each contract.
Regulation, settlement, and accessibility
Kalshi is regulated by the CFTC as a Designated Contract Market, making it the primary US-legal venue for event contracts. Settlements are performed in USD, not crypto, and there is no on-chain settlement. Withdrawals go through ACH or supported card rails. As with any regulated venue, there are geographic and state-level considerations for eligibility, and users should consult Kalshi’s published rules and your accountant for any compliance questions.
Where KalshiArb fits in
KalshiArb provides non-custodial scanning and AI-powered insights for intra-Kalshi arbitrage opportunities. It explains edge mechanics, helps identify spreads, and clarifies how to execute strategies within Kalshi’s rules. This article covers definitions so you can understand the basic Kalshi framework before exploring arb techniques.
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FAQ
- What is the core idea behind Kalshi?
- Kalshi offers binary YES/NO contracts on real-world events, with settlement to $1.00 for the correct side. This makes it a regulated, USD-settled venue for event contracts.
- What does a Kalshi contract pay out?
- If your prediction is correct, you receive $1.00 per contract; if incorrect, you lose the amount you paid to enter the contract.
- Are Kalshi markets legally regulated?
- Yes. Kalshi operates as a CFTC-regulated Designated Contract Market in the United States.
- How are contracts resolved?
- Each market has a written resolution rule, specifying the data source and threshold. Kalshi determines the outcome based on that rule, not an external oracle.