What the Kalshi-Polymarket Rivalry is Really About
After ICE agent Jonathan Ross shot Renee Good, Polymarket let traders bet on whether he’d be charged. Meanwhile, prediction market rival Kalshi did not and still has not listed ICE markets on its platform. Those different approaches suggest a line that CFTC-regulated prediction market platforms may be hesitant to cross.
Polymarket remains separate from Polymarket U.S., its CFTC-regulated and American-facing platform. Polymarket U.S. currently offers only sports markets, but political, crypto, and other markets are “coming soon,” per the app. How long Polymarket can operate one regulated and one unregulated platform remains an unanswered question for Michael Selig’s CFTC.
Kalshi and Polymarket’s rivalry runs deep, and it comes in part from a stark difference in philosophy. While Kalshi sees CFTC regulation at the core of its business model, Polymarket has treated regulations as limits to be pushed.
Recently, Kalshi seems to have been watching for unwritten rules alongside the written ones it adheres to.
Kalshi vs. Polymarket: Different strategies
Kalshi has made existing under CFTC regulation the linchpin of its founding strategy. It didn’t offer election contracts until it won the right to do so in court, and it frequently touts its existence under CFTC regulation to separate itself from Polymarket.
The Special Rule under the Commodity Exchange Act (CEA) allows the CFTC to review contracts “that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law.”
Domestic unrest isn’t listed as a prohibited category. However, Kalshi has already been defending itself from state gaming regulators accusing it of operating an illegal gambling platform. Critics like Better Markets have even argued that Kalshi’s election contracts “undermine the integrity of our elections.”
Kalshi’s decision not to list ICE markets, as of Jan. 16, suggests that the company recognizes there are practical limits of what customers or regulators will accept as legitimate financial instruments.
Polymarket has taken a different approach.
Polymarket’s degen vision
While Kalshi has built its identity around CFTC approval, Polymarket built it’s platform outside of the regulated financial industry from the beginning. It left the United States as part of a CFTC settlement in January 2022. After the Trump administration took power, the Department of Justice dropped its case against Polymarket.
Polymarket has since launched a separate platform regulated by the CFTC, but has not offered any categories beyond sports — yet. The crypto platform that has grown offshore remains outside of CFTC jurisdiction. After political markets launch on Polymarket U.S., consumers will get a clearer picture of what the CFTC will accept and what type of markets Polymarket believes needs to remain outside of the CFTC’s purview.