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A Commodity Futures Trading Commission (CFTC) filing provides an insight into prediction market Kalshi, as it could offer fee rebates to sportsbooks that lay off risk on its platform.
The document was submitted on Saturday, February 7, and it acts as a notice to the CFTC that the company is implementing a ‘Sportsbook Hedging Rebate Program’ on or after February 23.
When introduced, the program will go into effect upon exchange notice and will remain in effect until the earlier of February 1, 2027, or a date on which Kalshi amends or terminates the program.
How will Kalshi’s fee rebates program work?
According to the document, the purpose “is to foster efficient risk management by and for entities that currently offer sportsbook services. To improve market efficiency and to promote pricing efficiencies, entities explicitly hedging their risk from offering sportsbook services may use Kalshi without “taker” fees in specific circumstances.”
The aim is to also increase volume on the central limit order book and thereby enhance pricing efficiency. The more volume on the central limit order book, the greater the pricing competition.
Under the program terms, the intricacies of the introduction have been shared: “During the Program, solely for orders exceeding 300,000 total contracts traded for the hedging purpose described in the Program, Kalshi will rebate all “taker” fees (e.g., fees on non-resting orders) and fees derived from use of the RFQ system (“Rebates”), less any other reduction, rebates, or incentives earned in the relevant month, paid by Eligible Participants as exchange fees with respect to Eligible Markets.
“The Rebates shall be paid by the 15th of the following Month.”
This latest addition comes as The New York Times’ Dealbook newsletter reports the brand is working with the insurance company Game Point Capital which helps sports teams, athletics departments, and others to hedge financial risks.
Featured Image: Kalshi
