CFTC Regulation 40.2(d) Class Certification Regarding the Initial Listing of the “Will <entity> win <election> in Minnesota?” Contracts

KalshiEX LLC · received by the CFTC 27 October 2026 · the filing (PDF)

Summary

Warrant Check read 7 operative provisions in this filing. Across them, 15 of 42 checks are present, 3 partial and 20 absent. 2 provisions have every check present. 1 statement the exchange makes to the CFTC about the filing itself (such as that it complies with the Act) is not contract terms and is left out.

15 present3 partial20 absent4 not assessed

Staff-letter lens

The payout rule here is “Winner determination / Payout Criterion”: the rule that says what makes the contract pay Yes or No. The other 6 rules are fallback rules: what happens if the event is cancelled or delayed, the data goes missing, or the result is challenged.

Topic the staff letters raise	Payout rule	Fallback rules
Settlement source identified	Addressed	2 of 6 addressed
Settlement method described	Addressed	1 of 6 addressed
Covers every case it applies to	Addressed	2 of 6 addressed
Timing set	Addressed	1 of 6 addressed
Terms in the public filing	In the filing	5 of 6 in the filing

How the lens works and what it does not read

What the wording addresses

Winner determination / Payout Criterion — every check present.
“A candidate has won <election> if the candidate is elected”
Accelerated determination via media declaration: Independent Verification, Defined Benchmark, Comprehensive Coverage.
“at least one (1) of the seven (7) Designated Media Sources has declared”
Source Agency conflict hierarchy — every check present.
“the hierarchy set out in Source Agency above will govern”

What the wording leaves open

Accelerated determination via media declaration “at least one (1) of the seven (7) Designated Media Sources has declared”
- Suitable Method — Partial: A media projection (even uncontradicted) is a proxy for, not a confirmation of, the official legal declaration the Payout Criterion otherwise requires; the clause itself treats it as provisional ('may be resolved').
- Conclusive Link — Partial: Meeting the no-contradiction threshold does not guarantee the candidate was in fact declared elected under governing law; contradiction examples in the text show the mechanism can be wrong until official results are in.
- Relevant Timeline — Partial: Uses declarations made before the official certification process concludes to resolve a claim that is properly settled only once the full official record exists - an early snapshot standing in for the final determination.
What would close it: Require confirmation against the official certified result once available, treating accelerated resolution as provisional/reversible until then.
No-data fallback / last fair price “all markets will resolve to the last fair price”
- Independent Verification — Absent: Rests entirely on the Exchange's own 'sole discretion' - a party's own say-so, not any receivable third-party evidence.
- Suitable Method — Absent: No procedure is specified by which 'fair price' is derived; sole discretion is not a checkable method.
- Defined Benchmark — Absent: 'Last fair price' is undefined; no threshold, formula, or benchmark is named.
- Comprehensive Coverage — Absent: No defined population or methodology scope for how 'fair' is assessed across the market.
- Relevant Timeline — Absent: No defined time window for the discretionary determination.
What would close it: Define an objective formula or independent benchmark for 'last fair price' rather than unilateral Exchange discretion.
Correction/retraction materiality determination “the Exchange determines, in its sole discretion, that the correction”
- Independent Verification — Absent: Materiality is determined by the Exchange's own sole discretion, not by any receivable third-party evidence or neutral standard.
- Suitable Method — Absent: No defined procedure exists for assessing materiality; it is an unconstrained internal judgment.
- Defined Benchmark — Absent: 'Material error' is not defined by any threshold or criteria.
- Comprehensive Coverage — Absent: No defined scope of what data or population the materiality assessment covers.
- Relevant Timeline — Absent: No defined time boundary for how materiality is assessed beyond 'before Expiration'.
What would close it: Specify objective materiality criteria (e.g., vote-margin thresholds) and/or require independent confirmation of corrections.
Death/act of violence settlement “Kalshi may, in its sole discretion, settle the Contract”
- Independent Verification — Absent: Determination rests on Kalshi's own sole discretion and belief, not on any named, receivable third-party evidence.
- Suitable Method — Absent: No procedure specified for verifying occurrence or market impact; discretion is not a checkable method.
- Defined Benchmark — Absent: No defined threshold for what counts as 'materially affected' or a 'fair settlement price'.
- Comprehensive Coverage — Absent: No defined population/market scope for the materiality assessment.
- Relevant Timeline — Absent: Reliance on an 'approximate time' where precise time is unknown shows no defined, bounded time coverage.
What would close it: Tie the determination to an objective, externally verifiable trigger (e.g., confirmed news report with timestamp) and defined market-impact metric.
Market Outcome Review / Contingencies (Rule 7.1) “Kalshi has the right to determine payouts pursuant to Rule 7.1”
- Independent Verification — Absent: The operative evidence and procedure live in Rule 7.1 of the Rulebook, which is referenced but not included in the supplied text; as presented it is simply Kalshi's discretionary right.
- Suitable Method — Absent: Cannot assess capability because the governing procedure (Rule 7.1) is not provided.
- Defined Benchmark — Absent: No standard is stated in the supplied text; it is deferred entirely to the absent Rule 7.1.
- Comprehensive Coverage — Absent: Cannot assess scope without Rule 7.1's content.
- Relevant Timeline — Absent: Cannot assess timing without Rule 7.1's content.
- Relies on material referred to but not in the public filing.
What would close it: Include the text of Rule 7.1 (Market Outcome Review Process) so the evidentiary procedure can be assessed.

Every provision read

Winner determination / Payout Criterion

“A candidate has won <election> if the candidate is elected”

Determination: that <entity> was declared elected to the seat under the law governing the election, as reflected in official results · Consequence: binary settlement payment of $1.00 to Yes holders (or $0.00) based on Market Outcome

Present Independent Verification. Evidence is official certified election results published by a governmental authority (MN Secretary of State) and major news organizations in a defined hierarchy - receivable, neutral documentary evidence.

Present Suitable Method. Official certified results are precisely the record that establishes who was 'declared elected under the law' - the procedure matches the strength of the claim.

Present Defined Benchmark. Standard named: declared elected under the law governing the election, as reflected in official results of the Source Agencies.

Present Conclusive Link. Being declared elected under the governing law is definitionally identical to 'has won <election>' in the Payout Criterion.

Present Comprehensive Coverage. Covers the entire official result of the specific seat/election, not a sample; population matches the claim.

Present Relevant Timeline. Underlying includes any recount completed before Expiration; revisions after Expiration excluded, matching the obligation's period.

Accelerated determination via media declaration

“at least one (1) of the seven (7) Designated Media Sources has declared”

Determination: that the election outcome is effectively known before official certification, based on uncontradicted media declarations · Consequence: contract may be resolved Yes/No on an accelerated basis before official certified results are available

Present Independent Verification. Evidence is a formal projection or explicit statement by a named national media decision desk - a receivable, identifiable third-party output.

Partial Suitable Method. A media projection (even uncontradicted) is a proxy for, not a confirmation of, the official legal declaration the Payout Criterion otherwise requires; the clause itself treats it as provisional ('may be resolved').

Present Defined Benchmark. Standard defined precisely: >=1 of 7 named sources declares, and none contradicts or the declaring source does not retract, by Expiration time.

Partial Conclusive Link. Meeting the no-contradiction threshold does not guarantee the candidate was in fact declared elected under governing law; contradiction examples in the text show the mechanism can be wrong until official results are in.

Present Comprehensive Coverage. Applies to the whole election/seat in question, not a subset.

Partial Relevant Timeline. Uses declarations made before the official certification process concludes to resolve a claim that is properly settled only once the full official record exists - an early snapshot standing in for the final determination.

Source Agency conflict hierarchy

“the hierarchy set out in Source Agency above will govern”

Determination: that the value reported by the highest-ranked available Source Agency is the correct official result · Consequence: that source's reported value is used to determine the Expiration Value

Present Independent Verification. Evidence is the published output of named, ranked third-party sources (government authority, wire service, named networks).

Present Suitable Method. Deferring to the top-ranked governmental source when agencies conflict is capable of establishing which value is authoritative.

Present Defined Benchmark. A fixed, named hierarchical order of sources is specified.

Present Conclusive Link. The highest-ranked reporting source (the state election authority) being authoritative is consistent with establishing the official result.

Present Comprehensive Coverage. Applies to the whole reported result for the specific seat, not a partial sample.

Present Relevant Timeline. Applies to data as of/before Expiration, consistent with the Underlying's defined time window.

No-data fallback / last fair price

“all markets will resolve to the last fair price”

Determination: that the 'last fair price' determined by the Exchange reflects the true market outcome when no data exists · Consequence: markets settle at that discretionary price instead of an outcome-based payout

Absent Independent Verification. Rests entirely on the Exchange's own 'sole discretion' - a party's own say-so, not any receivable third-party evidence.

Absent Suitable Method. No procedure is specified by which 'fair price' is derived; sole discretion is not a checkable method.

Absent Defined Benchmark. 'Last fair price' is undefined; no threshold, formula, or benchmark is named.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. No defined population or methodology scope for how 'fair' is assessed across the market.

Absent Relevant Timeline. No defined time window for the discretionary determination.

Correction/retraction materiality determination

“the Exchange determines, in its sole discretion, that the correction”

Determination: that a subsequent correction to a published result remedies a 'material error' in the initial value · Consequence: the corrected value either governs (materiality found) or is disregarded (materiality not found)

Absent Independent Verification. Materiality is determined by the Exchange's own sole discretion, not by any receivable third-party evidence or neutral standard.

Absent Suitable Method. No defined procedure exists for assessing materiality; it is an unconstrained internal judgment.

Absent Defined Benchmark. 'Material error' is not defined by any threshold or criteria.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. No defined scope of what data or population the materiality assessment covers.

Absent Relevant Timeline. No defined time boundary for how materiality is assessed beyond 'before Expiration'.

Death/act of violence settlement

“Kalshi may, in its sole discretion, settle the Contract”

Determination: that a death or act of violence occurred and materially affected trading, justifying use of a pre-event price · Consequence: Contract is settled at the last traded price before the event (or via Outcome Review Committee), final and unreviewable

Absent Independent Verification. Determination rests on Kalshi's own sole discretion and belief, not on any named, receivable third-party evidence.

Absent Suitable Method. No procedure specified for verifying occurrence or market impact; discretion is not a checkable method.

Absent Defined Benchmark. No defined threshold for what counts as 'materially affected' or a 'fair settlement price'.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. No defined population/market scope for the materiality assessment.

Absent Relevant Timeline. Reliance on an 'approximate time' where precise time is unknown shows no defined, bounded time coverage.

Market Outcome Review / Contingencies (Rule 7.1)

“Kalshi has the right to determine payouts pursuant to Rule 7.1”

Determination: that the Expiration Value cannot be determined, triggering Kalshi's review process · Consequence: Kalshi determines payouts under Rule 7.1 instead of the standard Payout Criterion mechanism

Absent Independent Verification. The operative evidence and procedure live in Rule 7.1 of the Rulebook, which is referenced but not included in the supplied text; as presented it is simply Kalshi's discretionary right.

Absent Suitable Method. Cannot assess capability because the governing procedure (Rule 7.1) is not provided.

Absent Defined Benchmark. No standard is stated in the supplied text; it is deferred entirely to the absent Rule 7.1.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. Cannot assess scope without Rule 7.1's content.

Absent Relevant Timeline. Cannot assess timing without Rule 7.1's content.

Read 3 November 2026 with Warrant Check (instrument 1.0). Labels: Present, Partial, Absent describe whether each check is found in the wording as written. Not assessed: Conclusive Link cannot be judged where no Defined Benchmark is named; that follows from the missing benchmark and is not a separate gap.

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