Designated Contract Market (DCM)
A CFTC-regulated exchange authorized to list futures and options. Kalshi is a DCM.
A Designated Contract Market (DCM) is an exchange that has been approved by the CFTC to list and trade futures and options contracts. DCMs must meet strict requirements for reporting, compliance, market surveillance, and customer protection.
Why DCM status matters for prediction markets
Kalshi is the first prediction market platform to receive DCM designation from the CFTC. This has two major implications:
- Legal legitimacy: Kalshi's event contracts are legally authorized derivatives, not unregulated bets.
- Tax treatment: Contracts traded on a DCM have the strongest argument for Section 1256 treatment, which provides the favorable 60/40 tax split.
DCM requirements
To maintain DCM status, an exchange must provide fair and equitable trading, prevent market manipulation, have adequate financial resources, and comply with CFTC reporting requirements. This includes issuing 1099-B forms to traders.
Other prediction market platforms
As of 2025, Kalshi is the only major prediction market with DCM status. Interactive Brokers' ForecastEx also operates under CFTC oversight. Polymarket, DraftKings, FanDuel, and Robinhood do not have DCM designation.
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