Kalshi is moving to end a program that pays traders for generating volume, nearly a year before it was scheduled to expire.
In a Sept. 28 filing with the Commodity Futures Trading Commission (CFTC), the exchange moved the end of its Volume Incentive Program from Oct. 1, 2027, to Oct. 13.
The filing gives no reason for the change.
Last week, allegations emerged over trading in Kalshi’s Ether perpetual futures market that led to inflated volumes. It escalated to a Wall Street Journal story that also noted the CFTC was looking into the issue.
Meanwhile, Front Office Sports reported Tuesday that the CFTC is reviewing incentive programs across prediction markets platforms and that Chairman Michael Selig could take some form of action as soon as this week.
The agency has not announced a decision, identified a target or said it directed Kalshi to terminate its program.
How Kalshi’s rewards worked
Kalshi’s program divided a fixed reward pool among traders according to their share of qualifying volume in a designated market.
If a trader accounted for 10% of the eligible volume during a reward period, that trader received 10% of that market’s reward pool. Kalshi could set a period of up to 31 days and specify which markets and trades qualified. The program rewarded executed trades, rather than simply placing an order on the book.
The details matter because not all volume on Kalshi automatically earned a payment. Event contract trades generally had to execute between 3 cents and 97 cents, although the program exempted perpetual futures from that price restriction. Kalshi could also restrict eligibility to the maker or taker side of a market if it disclosed that condition.
Members with market-maker agreements were excluded from this particular program. So were certain intermediaries and customers trading through them. Kalshi also reserved the ability to remove participants it determined were abusing the rewards.
The exchange said the program was intended to increase trading and liquidity on its central order book. More activity can help a market attract counterparties. But executed volume alone does not tell readers whether a market consistently offered tight prices or whether its published activity would have occurred without an incentive.
The CFTC was already watching
The CFTC’s interest in these programs predates Kalshi’s termination filing.
In an Aug. 12 advisory, the agency’s Division of Market Oversight warned exchanges that incentives tied to trading volume thresholds could encourage participants to trade merely to earn rewards, potentially increasing the risk of wash trading or prearranged transactions.
Staff also raised concerns about promotions described as “risk-free,” unlimited rebates, guaranteed profit arrangements, and rewards whose terms are not clearly disclosed.
The advisory asked exchanges to make their programs’ mechanics and safeguards clear in regulatory filings. It did not find that Kalshi’s volume program violated CFTC rules, nor did it order the program shut down.
Front Office Sports has since reported that the agency is conducting a broader sweep of trader and market-maker incentives. A source told the outlet action could come by the end of this week, but Selig had not settled on an approach. That could mean something targeted, rather than a single rule or action covering every exchange.
Kalshi’s filing also lands amid scrutiny of unusual trading patterns in its Ether perpetual futures market.
The termination notice names no suspect trades or participants and makes no claim that misconduct prompted the change.
Not the end of incentives
Kalshi is ending one rewards structure, not abandoning incentives altogether.
Its separate Liquidity Incentive Program pays for qualifying resting orders that improve the order book. Unlike the volume program, an order can contribute to that program’s liquidity score without becoming a completed trade. Kalshi has also filed a separate Deposit and Trading Reward Incentive Program, which the CFTC lists under review following a Sept. 25 submission.
Those differences will be important if the CFTC moves this week. A payment for completed volume, a reward for keeping competitive quotes available, and a customer deposit promotion raise different questions, even if all three appear under the broad label of “incentives.”
For now, the firm news is narrow but significant: Kalshi has filed to retire its volume-based rewards no earlier than Oct. 13. Whether the move is connected to the CFTC’s review, and what Selig ultimately decides to do about prediction markets promotions more broadly, remain open questions.
