How Kalshi Works
A plain-English guide to Kalshi, the CFTC-regulated event-contract exchange. How prices work, who the market makers are, and how a yes/no contract becomes a $1.00 payout.
Short version: Kalshi is a regulated U.S. exchange where you trade yes/no contracts on real-world events. Each contract trades between $0.01 and $0.99 per share, settles at $1.00 if the event happens or $0.00 if it doesn’t, and resolves against an official source named in the rulebook before trading opens. Prices come from a public order book filled by retail traders and dedicated market makers, not from a bookmaker setting the line.
The basics: a yes/no contract for $1
Every Kalshi market is a binary contract on a specific question, for example, “Will the Fed cut rates in June?” or “Will the Yankees win the AL East?” You can buy yes shares or no shares. If the event resolves in your direction, each share pays $1.00; if it resolves against you, the shares are worth $0.00.
Prices live between those two endpoints, in cents: a yes share at $0.62 implies the market believes the event has a 62% chance of happening. Yes and no prices on a single contract always sum to $1.00 by construction. If you buy a no share at $0.38 and the event doesn’t happen, you make $0.62 per share. Paying $0.38 for a $1.00 payout is the same trade as betting against an event at +163 odds, Kalshi just shows the price directly instead of translating into bookmaker odds.
You can sell a position at any time before the contract resolves. Prices move as new information arrives and as other traders take the opposite side, so a $0.62 yes share can drift to $0.85 if the event becomes more likely (and you can take profit by selling at the new price). This is the structural difference from a sportsbook bet, which is locked in until the event settles.
What gets traded
Kalshi has built up a market menu that spans most categories where there’s a clean, official source for resolution:
- Sports: NBA, NFL, MLB, NHL, soccer (EPL, MLS, UEFA), college football, golf, MMA, tennis, and game-by-game prop markets.
- Politics and elections: presidential races, congressional control, governor and Senate races, and major policy questions.
- Economics: Fed rate decisions, monthly CPI/inflation prints, unemployment, GDP releases, recession probabilities.
- Weather and climate: daily highs in specific cities, monthly precipitation totals, hurricane formations.
- Entertainment and culture: Oscar and Emmy winners, Rotten Tomatoes scores, reality-TV outcomes.
- Crypto, commodities, and market data: price thresholds for major assets, S&P 500 levels, oil and gold movements.
Each market lists its full resolution rules on the contract page before trading opens, including the official source the contract resolves on.
Who’s on the other side: market participants
Kalshi is a two-sided exchange, every trade has a buyer and a seller, and both are other market participants, not the platform itself. Three groups make up most of the volume:
Retail traders.
The largest share by user count. Retail traders sign up, fund an account with USD via ACH, debit, or wire, and trade through the web or mobile apps. Many treat Kalshi the way they’d treat a brokerage account, sizing positions across multiple markets, holding to expiry, and using the platform as a research tool rather than a single-shot wager.
Institutional market makers.
Dedicated firms whose job is to post continuous bid and ask quotes on specific markets, earning the spread between the prices they buy and sell at. Kalshi onboarded its first dedicated institutional market maker, Susquehanna International Group, in April 2024. Jump Trading followed in late 2025. Market makers receive reduced trading fees and elevated position limits in exchange for the obligation to keep two-sided quotes live during market hours. Their presence is what allows a Kalshi contract to have tight spreads and absorb a large order without the price moving sharply, a structural difference from a thin market where every meaningful order moves the line.
Institutional and quant traders.
Hedge funds and proprietary trading firms increasingly trade Kalshi for arbitrage and macro exposure. A trader who has a model on inflation can express it on the CPI contract; a fund that wants election exposure without the operational complexity of options on volatility can trade Kalshi’s political markets directly. Capital flowing in from this segment grew sharply through the 2024 election cycle and has continued into 2026.
How orders match: the order book
Kalshi runs a Central Limit Order Book (CLOB), the same order-matching structure used by major futures exchanges. Buy and sell orders are sorted by price, then by time, and the engine matches the best-priced opposing orders first. If you place a market order, you cross the spread and execute against the resting limit orders on the book; if you place a limit order at a price inside the spread, your order sits on the book until someone takes it.
The CLOB structure has two practical consequences. First, prices reflect the collective view of everyone willing to put real money on each side at this moment, which is why prediction-market prices are widely treated as probability estimates. Second, you can scale into and out of positions over time, which means strategy isn’t binary; you can adjust as new information arrives.
How contracts resolve
Every Kalshi contract specifies its resolution criteria up front, in the contract’s rulebook, before any trading takes place. The rulebook is filed with the CFTC as part of the exchange’s self-certification process for each new market.
The rulebook names a specific official source for the outcome. A weather contract might resolve on a designated NOAA station’s published high temperature for a given day. A jobs-report contract resolves on the BLS employment situation release. An election contract resolves on certified results from the relevant state authority or, in some cases, the AP projection. Once the source publishes, Kalshi’s designated panel reads the result, marks the contract as yes or no, and settlement happens automatically.
Disputes are rare on Kalshi for a structural reason: the resolution source is locked in before trading opens. There’s no negotiation about which poll, index, or report to consult after the fact. If the source fails to publish (e.g., a government shutdown delays a BLS release), the rulebook also specifies the fallback timeline.
Funding, fees, and withdrawals
Kalshi runs in U.S. dollars on traditional banking rails. You fund an account via ACH transfer, debit card, or wire; withdrawals go back to the same channel. There are no crypto wallets to manage, no on-chain gas costs, and no exchange-rate friction.
Trading fees on Kalshi are minimal compared to traditional sportsbooks, in most markets they’re a small per-contract charge, often offset partially or entirely by maker rebates if you provide liquidity by posting limit orders that other traders take. Settlement of winning positions happens automatically, typically within hours of the official source publishing.
Regulatory context
Kalshi is a CFTC-regulated Designated Contract Market, the same regulatory category used by major futures exchanges like CME and ICE. The CFTC designated KalshiEX LLC as a DCM in late 2020, and the platform launched publicly in July 2021. Federal-level approval is settled, including for election contracts after the CFTC dropped its appeal in May 2025 and the district court ruling in Kalshi’s favor became final.
State-level legal action is the active front. Multiple states have challenged Kalshi’s sports and election contracts, arguing they fall under state gambling jurisdiction rather than federal commodities regulation. Kalshi is contesting these on federal-preemption grounds and has voluntarily limited some state-specific offerings while litigation proceeds. See our Polymarket vs Kalshi comparison for the current state-by-state picture.
Frequently asked
Is Kalshi gambling?
Kalshi’s legal position is that its contracts are CFTC-regulated financial instruments, event contracts under the Commodity Exchange Act, not bets. Multiple state regulators have argued the opposite, particularly for sports and election contracts. The federal courts have so far sided with Kalshi’s position; state-level cases are ongoing. The economic substance of trading a yes/no contract that pays $1.00 is recognizable to anyone familiar with options or sports betting, but the regulatory wrapper is materially different.
Can I lose more than I invest?
No. Each share has a maximum loss equal to its purchase price, if you buy yes shares at $0.62 and the event doesn’t happen, you lose $0.62 per share. There’s no leverage and no margin call.
Can I trade Kalshi from any state?
Most states, yes, but several states have taken enforcement action against Kalshi’s sports and event contracts and the picture changes week to week. Kalshi has voluntarily limited some offerings in states with active court orders. Check Kalshi’s current geographic availability before funding an account.
Where does Over / Under fit in?
Over / Under reads every contract on Kalshi (and Polymarket) and produces an AI-generated analysis on each, surfacing whether the current market price reflects the underlying evidence, what the resolution source actually says, and how confident the read is.