How does Kalshi monetize your predictions in a compliance prediction market valued at $2 billion?

Polymarket attracts encryption-native users and international traders, while Kalshi is born for Wall Street.

Written by: Thejaswini M A

Compiled by: Luffy, Foresight News

For months, you have been paying attention to the Federal Reserve meetings, knowing that they are about to adjust interest rates. The economic data is loudly indicating this, the inflation numbers are corroborating it, and even the subtle changes in Powell's wording are hinting at the arrival of this moment.

But how do you convert this judgment into a trade?

Of course, you can buy bonds, expecting them to rise when interest rates fall; or short the dollar, hoping the correlation remains unchanged; or heavily invest in interest-sensitive tech stocks, hoping the market will interpret the news as you expect.

But what if... you could trade directly on the Federal Reserve's decisions? Instead of playing these indirect "derivative games," you could directly bet on "Will the Federal Reserve cut interest rates at the next meeting?" If you guessed correctly, you could earn 1 dollar per contract?

Let's talk about sports betting again. You can buy New Balance stocks, hoping that Coco Gauff winning the Australian Open will boost athletic apparel sales; you can short Nike because their sponsored athletes were eliminated early; or you can invest in DraftKings, betting that the rise in tennis viewership will drive an increase in betting volume. But what if... you could directly bet on whether Gauff can win the Australian Open? Bet $100, if you guess right, you get $200, without having to look at corporate financial reports.

You can buy stocks of the TKO Group, hoping that WrestleMania attracts a record audience; you can short the stocks of competing entertainment companies; or bet on soaring merchandise sales. But what if... you could directly trade on whether Roman Reigns can retain his championship title? Put your money directly on the outcome of the storyline, skipping all the analysis from media companies.

This is exactly what Kalshi allows you to do.

Kalshi is the first regulated prediction market by the U.S. Commodity Futures Trading Commission (CFTC), where you can directly trade the outcomes of real-world events—not stocks affected by the events, not currencies that may fluctuate due to news, but the events themselves.

Make your predictions valuable

Federal Reserve decisions, election results, Supreme Court rulings, whether Bitcoin can rise to $150,000, whether inflation will exceed 4%, whether your supported team can win the championship... As long as you can form an opinion and the result has objective measurement standards, there may be corresponding markets on Kalshi.

Polymarket pioneered the concept of modern prediction markets, handling billions of dollars in trading volume during the U.S. elections, proving the immense demand for such markets. Meanwhile, Kalshi has just raised $185 million at a valuation of $2 billion, with large trading firms like Susquehanna providing liquidity, and Robinhood directly integrating the Kalshi market into its platform, allowing millions of retail traders to participate. Elon Musk's Grok AI has even been embedded into its trading interface.

This is a regulated, institutional-level "trading reality" infrastructure. Building on Polymarket's global layout, Kalshi brings the prediction market into the regulated U.S. financial system.

Think about what this means: for the first time, you can directly monetize the advantage of predicting real-world events without the friction of traditional financial markets - no complex derivatives, no counterparty risk, and no worries about whether your hedging tools actually work when the event occurs.

If you think the next non-farm report will be surprising, there are corresponding markets; if you believe Trump will win the 2028 election, you can trade related contracts now; if you are confident that AI companies will dominate the next decade, you can bet on specific milestones and regulatory outcomes that will determine their fate.

This platform transforms every piece of non-public information, every analytical advantage, and every well-founded prediction into potential profit opportunities. Unlike traditional markets that use complex strategies to arbitrage information advantages, prediction markets directly reward knowledge.

How Kalshi Works

Understanding Kalshi's mechanism is crucial because the way event contracts operate is different from any financial instruments you have traded before. Let me guide you step by step with a real example.

Step 1: Account Setup and Deposit

Create an account on kalshi.com and complete the necessary identity verification (KYC). Since Kalshi is regulated by the CFTC, you will need to provide standard documents such as identification and proof of address.

In terms of deposits, Kalshi offers multiple options with different limits and processing speeds: bank transfers are free but take 1-2 business days; debit cards provide instant deposits but incur a 2% fee with a daily limit of $2,500; cryptocurrency users can deposit USDC with a daily limit of $500,000, credited within 30 minutes; wire transfers are suitable for large amounts but have a minimum requirement.

Step 2: Understand market pricing

Enter any market to view the current pricing structure. Taking the market "Will Bitcoin reach $150,000 before 2026?" as an example: currently, the "Yes" contract is quoted at 44 cents, and the "No" contract is 59 cents, which means the market believes there is a 44% chance that Bitcoin will reach $150,000 before 2026.

The interface will clearly show your potential earnings: if you buy the "Yes" contract at 44 cents and Bitcoin really rises to $150,000, you can earn $1 for each contract, a profit of 56 cents per contract; if it doesn't rise, the contract will expire worthless.

The trading process is as follows: suppose you believe that Bitcoin can rise to $150,000 and you want to buy 100 "yes" contracts, each costing $0.44, totaling $44. If Bitcoin reaches the target before 2026, each contract will be worth $1, and you will receive a total of $100, making a profit of $56; if it does not reach the target, the contracts become void, resulting in a loss of $44.

Step 3: Place Order

Choose to buy the contract "Yes" or "No", enter the amount (minimum 1 dollar), and the platform will automatically calculate how many contracts you can buy and the maximum profit.

Take the example of Bitcoin: buying a "yes" contract for 1 dollar at 44 cents can get you approximately 2.27 contracts. If you guess correctly, you can receive 2.27 dollars, making a profit of 1.27 dollars. The calculation process is transparent before the trade is confirmed.

The brilliance of this model lies in its simplicity: your maximum loss is the purchase cost, and the maximum profit is 1 dollar per share minus the purchase price, with no additional margin calls, no complex Greek letters, and no overnight financing costs.

Step 4: Multiple Time Ranges

Many markets offer contracts for the same event with different time frames. The market for Bitcoin at $150,000 has options like "before August" (current probability < 1%), "before October" (18% probability), and "before 2026" (43% probability).

Each trading time frame is independent. If you think Bitcoin will reach $150,000 next year, you can buy a "yes" contract that expires in 2026 while selling a "yes" contract that expires in August.

Step 5: Monitor and Close Positions

You do not need to hold until expiration; the contract price will fluctuate in real-time according to news and market sentiment. The platform displays real-time price charts, allowing you to track probability changes.

If major news suddenly affects your position, you can sell immediately. For example, if you bought a Bitcoin "is" contract at 44 cents, and good news drives the price up to 60 cents, you can sell immediately, making a profit of 16 cents per contract, without waiting for the final result.

Closing operations are very smooth: you can place a market order (trade immediately at the current price) or a limit order (wait for the target price), and potential profits and losses will be displayed before confirming the trade. Settlement is automatically completed through preset data sources - no disputes, no room for interpretation, just look at the data.

Position limits can prevent a single trader from manipulating the market. Most retail investors can trade up to $25,000 per contract, while institutional traders enjoy higher limits. Fees are charged at 0.7%-3.5% of the contract value, depending on market probabilities, with contracts close to 50/50 odds having higher fees than extremely unpopular contracts.

Market Classification and Discovery

Kalshi divides the market into several categories: politics, sports, economy, encryption, climate, etc. The popular sectors highlight markets with high activity or recent price fluctuations.

The platform also has a "Views" section, where users discuss market analysis and share trading logic. This community attribute helps you discover new markets and understand different perspectives on the probabilities of events.

For active traders, Kalshi offers API interfaces that support algorithmic trading and data analysis: you can access historical price data, automate orders, and integrate Kalshi markets into broader trading strategies.

The platform also provides detailed transaction volume and open position data for each contract, helping you assess liquidity before making large trades.

Its brilliance lies in simplicity: no complex derivatives, no leverage, counterparty risk is limited to the exchange itself, only a pure information market, with transparent and regulated settlements.

Investment managers use Kalshi to hedge specific event risks that traditional tools find difficult to cover efficiently: clean energy funds worried about regulatory changes can directly trade policy outcome contracts to hedge; a portfolio heavily invested in tech stocks can hedge against antitrust action risks by trading on related legal markets.

If you hold assets worth 1 million dollars, specific policy changes may cause a 20% reduction in value. Spending 50,000 dollars to purchase a hedge contract with a 25% probability means that if the event occurs, you can receive 200,000 dollars, exactly offsetting the loss of the portfolio.

Traders with expertise can directly monetize their knowledge: insiders in the political sphere trade election markets, economic analysts trade Federal Reserve decision contracts, and industry experts trade regulatory outcome markets. Unlike the stock market—where information advantages are quickly arbitraged through complex derivative strategies—event markets allow excellent predictions to be directly converted into profits. If you have an edge in predicting FDA approvals or Supreme Court rulings, it can immediately translate into trading gains.

Grok Integration

The recent collaboration with xAI has shown us the future of information trading.

The integration of Grok provides real-time analysis of on-chain data, historical odds, and breaking news within the Kalshi interface. Before placing an order, users can query Grok for event background information, probability assessments, and related data trends.

This creates a feedback loop: artificial intelligence helps traders make better predictions, and predicting market outcomes can train the AI system's real-world predictive capabilities. Grok is tested in real-time probability assessment, and traders gain AI-enhanced information analysis.

Its impact goes beyond individual trading decisions: as AI systems become better at processing vast amounts of information and recognizing probabilistic patterns, market predictions will become more efficient. This means narrower spreads, more accurate price discovery, and more practical hedging applications.

Comparison between Kalshi and Polymarket

The prediction market space now has two complementary leaders: Polymarket has pioneered the prediction market industry with its encryption-native innovations, while Kalshi was born for Wall Street.

core differences

Kalshi is fully regulated by the CFTC, funds are held in federally insured accounts, disputes are resolved through clear processes, and all operations are consistent with traditional finance: deposit via bank transfer, trade in USD, and withdraw to checking accounts.

Polymarket settles in USDC and resolves disputes through decentralized oracles, proving the model's viability globally. Recently, it also obtained the appropriate license in the United States and is preparing to expand into regulated markets.

Audience Differences

Institutional capital flows to Kalshi as regulation brings certainty: large market makers like Susquehanna provide liquidity, with over $1 billion in monthly trading volume proving the mainstream market's preference for compliant platforms.

Polymarket's innovation and global reach have attracted encryption-native users and international traders who value decentralization and permissionless access. Its early success has validated the value of the entire prediction market category.

Conclusion

For U.S. users who value regulatory protection and integration with traditional finance, Kalshi has obvious advantages; for global users who adapt to encryption infrastructure and recognize Polymarket's innovations, the latter has unique value. The two platforms drive the prediction market towards the mainstream from different angles, and their joint growth reflects the demand from both institutions and retail investors for this new asset class.

What Your Strategy Means

Whether you are managing a portfolio, building trading strategies, or looking to understand financial trends, the rise of Kalshi is worth paying attention to.

To portfolio managers: Event contracts provide precise hedging tools that cover risks difficult to manage with traditional tools: political risk, regulatory risk, and macro event risk can now be directly hedged, without relying on imperfect correlations.

• For active traders: The informational advantage of predicting real-world events can be directly monetized, and your expertise in specific areas has a clear path to profitability.
• For long-term investors: Understanding the evolution of prediction markets helps to grasp "financializing all measurable uncertainties". Companies that build such infrastructure early may reap substantial rewards.
• Regulated prediction markets are like DeFi in 2019: still in their infancy, but with clear product-market fit, and with significant growth potential as infrastructure improves and adoption increases.

Kalshi's $2 billion valuation and the increasing institutional adoption indicate that we have moved past the experimental phase, and event contracts are becoming a legitimate asset class. Agile traders will gain a first-mover advantage in this rapidly expanding market.

Kalshi is the infrastructure layer of "trading reality". As the boundaries between information and markets continue to blur, the value of this infrastructure will become increasingly prominent.