Kalshi Terminates Volume Incentive Program Nearly a Year Ahead of Schedule

Kalshi is ending its Volume Incentive Program. A Sept. 28 self-certification filing with the Commodity Futures Trading Commission sets the termination no earlier than Oct. 13. The program had been slated to end on Oct. 1, 2027. The exchange provided no specific reason and instead cited its discretion to modify or terminate such programs at will.

Kalshi Volume Incentives Explained

The program was filed with the CFTC in February 2023 and launched the following March. Its purpose was to increase volume and liquidity on the central limit order book and thereby enhance pricing efficiency. More volume and liquidity on the central limit order book and more efficient pricing benefit all participants in the marketplace.

Eligibility excluded affiliates, those with Market Maker Agreements, introducing brokers, futures commission merchants, and their non-disclosed customers. Kalshi established a fixed reward for each eligible market over terms of up to 31 days. Participants then received a proportional share based on their trading volume.

Only trades priced between $0.03 and $0.97 counted toward eligible volume, except for perpetual futures. Rewards for event contracts were capped at $0.005 per contract to limit price distortion.

Outside Pressures on Incentive Programs

The termination arrives as the CFTC examines prediction market incentive programs more closely. In August the agency issued an advisory reminding designated contract markets of obligations under the Commodity Exchange Act and outlining staff expectations for submissions. Reports indicate growing frustration with platforms that have not complied, with Chairman Michael Selig potentially prepared to act.

The same advisory flagged heightened risks of wash trading. The Wall Street Journal reported nearly 1 million trades of almost identical size, totaling more than $5 billion, through Kalshi’s ether perpetual futures market since August. The filing does not link the program end to those trades.

Kalshi denied wash trading. “It is worth re-iterating that wash trading is explicitly banned in our rulebook,” the company wrote. “We are regulated. We know who is trading. We mechanically block self-trades, and have surveillance watching for pre-arranged trades with a partner. We’ve seen no evidence of collusion or wash trades.”

Reporting: Legal Sports Report

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