Betting Against the Market: Kalshi's 'Perpetual Trades' Draw Lawsuits From Wall Street's Plumbing

For decades, betting against a company's stock was a ritual reserved for brokerage accounts, margin agreements and the rulebooks of securities law. Now a prediction market is offering a new way to do it, and Wall Street's back-office institutions are going to court to stop it.

According to The New York Times, the Commodity Futures Trading Commission has allowed Kalshi, the regulated event-contract exchange best known for markets on elections, economic data and pop culture, to offer what it calls "perpetual trades" tied to stocks and cryptocurrencies. The products let users take positions on price movements, including bets that a share price will fall, without the expiration dates that define traditional futures and options.

In response, two powerful clearinghouses have filed lawsuits. Clearinghouses guarantee that trades settle even when one side defaults, and they argue that traders using the new products would not be properly protected.

A Turf War Over Who Guards the Vault

At its core, the dispute is about jurisdiction. Stocks fall under securities regulation, a system built around investor disclosure, broker obligations and a mature set of safeguards for retail customers. The CFTC oversees commodities and derivatives, a world historically populated by farmers hedging crops and institutions hedging risk. Perpetual contracts on equities sit awkwardly between the two, and critics argue that putting them under a commodities framework could let familiar investor protections slip through the cracks.

Perpetual contracts are not new. They have been a staple of offshore cryptocurrency exchanges, where traders have embraced them, sometimes with heavy leverage and painful liquidations. What is new is seeing the structure approved by a U.S. regulator and applied to shares of American companies, through a platform whose user base leans heavily toward retail customers.

Kalshi has built its business by pushing on regulatory doors that others assumed were locked, including a successful legal fight to list contracts on congressional control. Its supporters describe the perpetual trades as a natural next step, giving ordinary users a simple tool to express views on markets. Opponents see something closer to a casino table wheeled onto the trading floor, and they say financial innovation is outrunning financial guardrails.

Why Washington Should Care

The fight carries clear political stakes. Prediction markets have grown rapidly, attracting venture capital, celebrity endorsements and scrutiny from lawmakers in both parties who worry about gambling-style products marketed as investments. The CFTC's decision suggests the agency is willing to give these platforms more room, a stance likely to sharpen debate in Congress over whether the line between securities and commodities still makes sense.

The lawsuits now place that question before the courts. Judges will have to decide whether the CFTC acted within its authority and whether the clearinghouses' concerns about customer protection justify halting the products.

For traders, the outcome will determine whether shorting a stock becomes as easy as placing a bet on a football game. For regulators, it may decide which agency writes the rules for the next generation of markets.

Neither side appears ready to back down. Whatever the courts decide, the case has already made one thing clear: the boundary between investing and wagering in America is being redrawn, one lawsuit at a time.