Market Regulation

Kalshi is terminating its volume-incentive program nearly a year early and replacing it with a more flexible rewards framework, even as the prediction-market operator defends itself against scrutiny over trading patterns and approaches a $40 billion valuation. The shift raises hard questions about whether the exchange’s record-breaking activity reflects genuine demand or dependence on rewards engineering.

• Kalshi filed to end its Volume Incentive Program on October 13, 2026, nearly a year ahead of its original October 1, 2027 deadline.
• The exchange handled $3.24 billion in contracts on September 27 alone, with weekly volume reaching $15.66 billion, capturing 80% of all tracked prediction-market volume.
• Kalshi is replacing fixed-pool volume rewards with targeted promotions allowing up to $2,500 per participant and $5,000 lifetime, with heightened surveillance for abusive trading.

• $40B Kalshi’s target valuation in ongoing funding talks, up from $22 billion in May 2026
• 80% Kalshi’s share of tracked prediction-market volume as of late September 2026
• $15.66B Weekly contract volume in the seven days through September 27

Kalshi told the Commodity Futures Trading Commission in a September 28 filing that its Volume Incentive Program will terminate no earlier than October 13 (Tuesday, October 13, 2026), accelerating by 363 days its previously scheduled wind-down. The decision comes as researchers have identified repetitive trading patterns in Kalshi’s perpetual futures markets, including clusters of roughly $5,500 trades in Ethereum contracts. Kalshi has rejected allegations of wash trading, saying such activity reflects market makers placing fixed-size quotes that other traders repeatedly hit. The company says it is not under investigation. The filing provides no explanation for the early termination and does not link it to the trading scrutiny.

Kalshi replaces volume pools with targeted trader promotions and surveillance

Days before filing to end the original program, Kalshi submitted a new Deposit and Trading Reward Incentive Program to the CFTC, with the modified version received September 25 and effective as of September 28. The two programs can overlap during the transition, but the new framework grants the exchange far greater discretion in how it spends money to attract traders.

Under the old structure, Kalshi distributed fixed reward pools proportionally to each trader’s share of eligible market volume. The new program lets Kalshi run time-limited promotions lasting three to 90 days, each tied to deposits, trading activity or both.

Individual promotions can pay up to $2,500 per participant; total rewards are capped at $5,000 per person over a planned two-year program life. Kalshi can offer percentage matches or fixed-value incentives across any category it designates, crypto, sports, economics, financials, politics, weather and entertainment.

The new framework explicitly addresses suspected abusive trading. Transactions under review for potential self-matching, wash trading, prearranged trading or other prohibited conduct will be excluded from promotional rewards. Kalshi’s surveillance staff will apply heightened monitoring to incentive recipients and can terminate eligibility or pursue disciplinary action.

Record volume masks unresolved questions about reward dependency

The incentive transition unfolds against a backdrop of record trading activity. According to DeFiRate data, Kalshi handled $3.24 billion in contracts on September 27 alone, with weekly volume reaching $15.66 billion in the seven days through that date. Its share of tracked prediction-market volume climbed to near 80%, up substantially from levels a year earlier.

That growth is driving investor appetite. Kalshi is in advanced discussions to raise approximately $1 billion at a valuation near $40 billion, Reuters reported. Sequoia Capital and Wellington Management are discussing leading the round, with Tiger Global and Dragoneer Investment Group also considering participation. A deal at that price would nearly double the $22 billion valuation Kalshi secured in a $1 billion raise in May. The company is also exploring expansion beyond prediction markets into additional asset classes and has held preliminary discussions about a potential initial public offering.

The critical question investors now face is whether Kalshi’s activity reflects durable customer demand or continued reliance on the economics the exchange engineers.

The structure of the new program suggests Kalshi believes targeted acquisition can work without fixed-volume pools. By tying rewards to account age, funding status, prior activity levels, geography and contract categories, Kalshi can segment its customer base and tailor incentives to retention rather than raw volume.

Yet the program’s inclusion of heightened surveillance language, explicitly excluding suspected wash trading and self-matching from rewards, implies Kalshi acknowledges that some activity flagged by researchers may not reflect genuine market demand.

One material question remains unresolved: whether Kalshi’s data on “abusive trading” will be disclosed to the CFTC or made public, and if so, in what form.

The filing states that Kalshi’s surveillance staff will apply heightened monitoring and can exclude transactions, but it does not specify whether results of that monitoring will be reported to regulators or become subject to the CFTC’s docket on prediction-market operator rules. That transparency question matters to institutional investors assessing the health of Kalshi’s orderbook and the reliability of volume figures used to support a $40 billion valuation.

The CCS read. Kalshi’s shift from pooled to targeted rewards may reduce headline volume in the short term but could improve quality by filtering out mechanical trading tied to fixed incentive structures. For ETF sponsors and institutions benchmarking prediction-market liquidity, the early program termination signals either confidence that underlying demand is durable or a defensive move to preempt further scrutiny. The heightened surveillance language suggests Kalshi is tightening definitions of acceptable activity, a prudent step if regulators are watching, but one that could reveal margin between reported and genuine volume.

Watch for the CFTC’s response to Kalshi’s new framework. The regulator must rule on whether the modified program meets the standards set in its prediction-market operator rules. Any conditions the CFTC imposes, particularly around surveillance disclosure or transaction exclusion thresholds, will signal how closely federal regulators are examining the relationship between incentives and trading volume across the crypto derivatives sector.