Kalshi Launches Prediction Market Rebate Program for Sports Event Contracts

Key Highlights

• Strategic Rebates: Kalshi will waive 100% of “taker” and RFQ fees for sportsbooks hedging risk.
• Volume-Driven: Program applies to participants who exceed 300,000 contracts per month.
• Liquidity Push: Designed to tighten spreads and deepen liquidity via Kalshi’s central order book.

Kalshi has formally notified the Commodity Futures Trading Commission (CFTC) of a new Sportsbook Hedging Rebate Program designed to integrate traditional sports betting risk management into the regulated prediction market ecosystem.

Scheduled to take effect on or after February 23, 2026, the initiative creates a financial incentive for sportsbooks to hedge liabilities on Kalshi’s CFTC-regulated exchange. The program will remain active through February 1, 2027, unless amended or terminated earlier.

Unlike traditional sportsbooks that price bets internally, Kalshi operates a federally regulated derivatives exchange where event contracts trade through a central limit order book (CLOB), allowing transparent price discovery and two-sided liquidity.

Bridging Sportsbooks and Prediction Markets

The program’s core objective is to improve capital efficiency and pricing across sports event contracts by encouraging institutional hedging flow.

Under the framework, qualifying participants will receive a 100% rebate on “taker” fees and RFQ transaction fees when offsetting sportsbook-related exposure.

Historically, sportsbooks have managed lopsided action through internal risk adjustments or private B2B layoff arrangements. Kalshi’s program introduces a regulated, exchange-based alternative that could standardize hedging through transparent order book execution.

By directing high-volume hedging activity into its CLOB, Kalshi aims to:

• Increase quoted depth
• Narrow bid-ask spreads
• Enhance overall market efficiency

The move comes less than a week after the prediction market platform announced that it had surpassed $10 billion in monthly trading volume following the Super Bowl.

Program Terms and Eligibility

The rebate structure targets institutional-scale participants.

To qualify, members must exceed 300,000 total contracts traded for sportsbook hedging purposes within a calendar month.

Eligible Participants:

• Kalshi members explicitly offsetting or hedging sportsbook liabilities
• Entities that attest to qualification and periodically verify hedging-related volume

Exclusions:

• Kalshi affiliates
• Members under an existing Market Maker Agreement
  Introducing Brokers (IBs) and Futures Commission Merchants (FCMs) when transacting via those intermediaries

Rebates will be distributed by the 15th of the month following qualifying activity.

Regulatory Oversight and Safeguards

Kalshi certified that the program complies with the Commodity Exchange Act (CEA) and applicable CFTC regulations.

To prevent abuse or manipulative practices, the exchange’s Chief Regulatory Officer retains discretionary authority to revoke eligibility if trading patterns are deemed inconsistent with bona fide hedging activity.

“The increased volume and liquidity encouraged by the Program will enhance the competitiveness and efficiency of the market,” the filing states, adding that the initiative is expected to be economically sustainable for the exchange.

Strategic Implications

The rebate program signals Kalshi’s intent to position itself as a structural liquidity venue for sports-linked event contracts rather than merely a retail-facing prediction platform.

If successful, the initiative could:

• Shift institutional hedging flow away from private layoff markets
• Improve pricing efficiency for retail traders
• Further legitimize federally regulated sports event contracts

As regulatory debates continue over the intersection of sports betting and derivatives markets, Kalshi’s move represents one of the clearest attempts yet to align sportsbook risk management with federal exchange infrastructure.

Program Specifications

Detail	Specification
Effective Date	February 23, 2026
Primary Incentive	100% rebate of “taker” and RFQ fees
Volume Threshold	>300,000 contracts per month
Duration	Through February 1, 2027
Oversight	CRO discretionary review & audit

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