Can Kalshi’s Self-Policing Save Prediction Markets?

^{The online prediction market platform Kalshi just announced new limits for young traders. (Photo: Mojahid Mottakin / imageBROKER)}

On Tuesday, Oct. 27, Kalshi announced a slate of new protections designed to limit what 18- to 20-year-old traders could spend on their prediction market platform. The move is tailored at a common concern levied against prediction markets: that they effectively allow underage Americans a way to gamble, even as regulated casino and sports betting sites require users to be at least 21 years of age.

This is far from the first time Kalshi or other major prediction markets have taken steps to respond to criticism of their platforms. With legal scrutiny intensifying — over both sports event contracts and insider trading — it’s reasonable to wonder whether these steps are an effort to head off more stringent regulation before it arrives.

Deposit Limits for Young Traders

According to a release from Kalshi, the new rules will create special accounts for users aged 18 or older, but under 21. These accounts will have a monthly deposit limit of $2,500. In addition, if new traders have a balance of $1,000 or more and allocate 25% or more of their balance to a single trade, they will receive an alert encouraging them to diversify their trading.

“Like the stock exchange, Kalshi is available only to traders 18 and older,” Kalshi COO Luana Lopes Lara said in a statement. “Still, we know that young adults are often new to markets and may need more education and safeguards, so we are expanding our protections for this group of users.”

The new protections come with partnerships with parent and youth safety organizations, which will work with Kalshi to publish “Parents’ Guides to Prediction Markets,” an effort to provide parents with information to help keep minors off prediction market platforms.

Prediction Markets Scramble to Address Controversies

With increased state and federal scrutiny from lawmakers, Kalshi has worked to position itself as a responsible operator. Earlier this year, the company added facial recognition technology as part of a new age-verification program, notably after the introduction of the Prediction Market Act of 2006 in the US Senate – a bill that would have required the same measures.

The company has also tried to get ahead of insider trading allegations. In April, three candidates for political office were fined and suspended by Kalshi for trading on their own races, and both Kalshi and Polymarket have looked to strengthen their own insider trading rules and safeguards throughout 2026.

Actions like these aren’t going to satisfy many state regulators, especially when it comes to sports event contracts. States across the nation have engaged in legal battles with Kalshi and other prediction markets, with New Jersey asking the Supreme Court to take up the issue.

Most recently, Utah took things a step further by filing criminal charges against Kalshi and its founders, Luana Lopes Lara and Tarek Mansour. That action came just days after the Commodity Futures Trading Commission (CFTC) filed its own lawsuit in an effort to stop Utah’s civil case against Kalshi.

Small Steps Now, Big Payoffs Later?

If self-regulation is a strategy for prediction markets, state governments aren’t the target. The goal is more likely to head off legislative action from Congress or stronger rules from the CFTC itself.

In May, the Senate Commerce and Technology Committee held a hearing on prediction markets, with members from both parties showing discomfort with the proliferation of sports event contracts. And while the CFTC continues to back prediction markets in state-level lawsuits, it has also sought to strengthen its own rules and better define what qualifies as a swap. If Democrats secure congressional majorities in the upcoming midterm elections – or win the White House in 2028 – that could also increase pressure to rein in the industry.

But changes to prediction markets wouldn’t mean they would disappear. While self-regulation won’t stop critics and regulators from seeking limits on what these platforms can offer Americans, it might demonstrate a willingness to act responsibly, similar to regulated iGaming operators. If that makes for a gentler relationship with government officials down the road, today’s small concessions could head off far harsher constraints in the years to come.