Kalshi is asking the Securities and Exchange Commission to slow down Cboe's push into event-based products, creating an interesting role reversal in the prediction markets industry. The company wants regulators to hold off on approving new Cboe binary options tied to specific corporate performance metrics while the SEC and Commodity Futures
Trading Commission work through some bigger jurisdiction questions. The timing makes the dispute especially interesting. Kalshi spent years pushing for broader access to event contracts, while established exchange operators have argued that some prediction market products have reached traders too quickly.
Cboe and Kalshi Are Starting to Cross Paths
Cboe wants to offer binary options tied to company-specific key performance indicators, putting its proposal surprisingly close to territory Kalshi has already entered. Kalshi currently offers event contracts tied to corporate developments, including markets involving Nvidia's workforce and what company executives could discuss during earnings calls. Cboe is taking a different regulatory route.
Its proposed products would fall under SEC oversight, while Kalshi operates as a CFTC-regulated designated contract market. That creates a strange situation where two products offering potentially similar exposure could face very different regulatory processes. Some of the key differences driving the dispute include:
- Kalshi primarily operates under CFTC oversight.
- Cboe is seeking SEC approval for its proposed products.
- The two agencies are already reviewing where their respective authority begins and ends.
- Both companies are moving further into event-based financial products.
That last point could become increasingly important. Prediction markets are expanding well beyond elections and economic reports, bringing them closer to territory traditionally occupied by established financial exchanges.
Kalshi Says Regulators Should Set the Rules First
Kalshi is not arguing that Cboe should stay out of the market permanently. Instead, the company says the SEC should wait until broader questions about how these products should be classified have been addressed. The SEC and CFTC are already seeking public input on where jurisdiction should fall for newer financial products.
Kalshi Chief Compliance Officer Sudhir Jain argued in the company's letter that approving Cboe's proposal now could effectively answer some of those unresolved questions before that process finishes. For Kalshi, that could also be a competitive issue. Cboe entering the same general market through a different regulator raises questions about whether competitors offering similar products would operate under comparable standards.
Traditional Exchanges Are Pushing Back Too
The disagreement is hardly one-sided. Cboe CEO Craig Donohue recently questioned whether some prediction market products belong under CFTC jurisdiction at all, arguing that certain contracts should instead qualify as securities regulated by the SEC. CME Group has raised its own concerns. CEO Terry Duffy recently clashed with Kalshi co-founder Luana Lopes Lara over self-certification.
This process allows CFTC-regulated exchanges to introduce many contracts without receiving individual approval beforehand. The result is an unusual regulatory fight. Prediction market companies are moving toward products traditionally associated with financial exchanges, while established exchanges are simultaneously moving toward products that increasingly resemble event contracts.
The Competition is Moving in Both Directions
Kalshi is not simply defending its existing territory. The company is separately seeking CFTC approval for perpetual equity futures, potentially putting it into more direct competition with traditional exchange products. That makes this bigger than one SEC filing.
Kalshi, Cboe, CME and other exchanges increasingly appear to be competing over where prediction markets end, and traditional financial markets begin. You can expect that line to become even harder to draw as platforms create more contracts tied to companies, economic indicators and other financial events.
The Trade Handle Prediction Markets Take
We think the most interesting part of this dispute is how quickly the competitive landscape has changed. Prediction markets were once the outsiders trying to convince regulators that event contracts deserved a place within established financial markets. Now some of those same platforms are large enough to challenge traditional exchanges directly.
The SEC and CFTC ultimately have a much bigger question to answer than whether Cboe can launch these particular products. Regulators need to determine how economically similar contracts should be treated when companies approach them through different regulatory frameworks.
Whatever they decide could shape the next phase of prediction markets. The industry is no longer simply fighting for permission to exist. It is increasingly fighting over who gets to offer what, which regulator gets to oversee it, and where the market boundaries should actually sit.