Kalshi Adds Midterm Transparency Tools as Combo Contracts Lift Prediction-Market Volume

The first feature will tag election markets as low volume if they have less than $10,000 in activity. Prediction markets experts have warned that prices in low-volume markets can fluctuate widely and that spreads between buying and selling can stretch. Kalshi will also publish Brier scores for its own election markets, which measure the accuracy of the market's probabilities against actual outcomes. The platform is also launching activity feeds that show individual trades on election contracts live.

Kalshi said it decided to provide the features after observing that election traders were participating more in markets covering local races than national ones. Co-founder and CEO Tarek Mansour called the midterms the "first meaningful prediction market election," saying the platform's election markets have grown six times faster than football markets this year compared with the year before. Kalshi's internal data also indicates that more people are viewing its midterm markets than are trading on them by a ratio of five to one. In July, Kalshi released a "Midterms Hub" that allows anyone to view traders' odds on markets tied to U.S. Senate and House of Representatives races.

The transparency push comes as combo contracts, or multiple contracts stacked together that only pay out if all of them win, have exploded in popularity. Similar to parlays on traditional sportsbooks, combos have become a major source of notional volume even though they represent a small share of total transactions. Last month, combos accounted for more than 50% of notional volume on Kalshi, driven by the start of the NFL season. Combos are overwhelmingly made up of combinations of multiple sports contracts.

As rival Polymarket worked to expand its U.S. exchange this year, combos were a priority following the domestic platform's official launch in May. Combos are now nearly 50% of daily volume on Polymarket U.S., helped by growth during the NFL season.

The large share of volume has drawn attention because of how the Commodity Futures Trading Commission requires exchanges to report volume. The multi-leg contracts are "helping [Polymarket and Kalshi] claim a higher number with lower realistic cash output," said Chris Park, a researcher and founder of MSR Decode, a research firm analyzing prediction market data.

When a trader places a trade on a prediction market, platforms measure it as $1 of notional volume regardless of the cash placed. All event contracts have binary outcomes between $0 and $1, and no matter what price a speculator pays, someone must take the other side of the order and make $1 in total volume. But combos can have payouts much greater than $1, meaning someone can put very little money down, sometimes pennies, and it will be measured as potentially thousands of dollars in volume because market makers take the other side of these high-payout trades.

A CNBC analysis of trades on Kalshi on Sept. 27 showed the difference in practice. On single contracts, the average amount of cash placed on a trade was less than 47 cents. On combo contracts, the average per contract was about 9 cents. While combos comprised 58% of Kalshi's trading volume in September, they made up less than 13% of the total transactions on the platform, according to data on Dune. Other than sports, combos top other categories for notional volume on Kalshi, with over 35% total volume share.

Details on how combos are measured are not always clear to the public, but their effect on headline volume numbers can make platforms look as though they are growing faster than they are. The rising popularity of sports-related event contracts has hurt traditional online sportsbooks. FanDuel parent Flutter Entertainment and DraftKings have seen their stocks plunge 70% and 45%, respectively, over the past year.

Some analysts say investors may be confusing activity numbers that are not exactly comparable. "I have spoken to investors who see the notional number and compare it to [the] handle in sports betting, and then make the argument that ... these prediction markets have already exceeded [the] scale of sports betting," said Ian Moore, an analyst at Bernstein. A handle in a sportsbook measures the total dollar amount wagered, while prediction markets count both sides of a trade.

"When a client buys a deep out-of-the-money contract or a combo, prediction markets may have dollar volumes anywhere between 20 to 100 times greater than sportsbooks because CFTC reporting requires one thing and sportsbooks report the same activity differently," said Rich Jaycobs, an independent advisor to prediction markets seeking regulatory approval from the CFTC. "Same basic bet, same basic idea, but you're getting a completely different perception of activity."

Kalshi said its notional volume does not overstate activity. "If people are more interested in other measurements, they can look at other metrics," said spokesperson Jack Such. While notional volume is the standard metric for prediction markets, some have suggested looking instead at taker volume, because takers scoop up liquidity from market makers rather than provide it, which can be a better yardstick of activity on exchanges. Polymarket agrees with that approach. "We really like to look at taker volume in terms of buying yes on combos," said Kyle Gesuelli, the company's head of revenue and analytics. That measures trader demand for bets in which all the combined outcomes turn true. "That feels like a better measure for us to just truly understand the underlying activity."

CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.