Kalshi has received regulatory approval to offer margin trading to professional clients, marking a major shift from traditional prediction markets that require fully collateralized positions. The move is aimed at attracting institutional investors as trading volumes in the sector continue to climb.

The license, granted to Kalshi’s affiliate Kinetic Markets, allows the firm to operate as a futures commission merchant, according to a filing with the National Futures Association. The Commodity Futures Trading Commission (CFTC) must still approve rule changes allowing trades without full upfront collateral before margin trading can go live.

Margin trading enables investors to take positions with less capital upfront, a standard practice in conventional markets but new for regulated prediction platforms. Competitors, including crypto-native Polymarket, continue to operate with fully collateralized positions only.

Prediction markets allow users to bet on outcomes of real-world events, from elections to economic releases, and volumes have surged despite legal scrutiny from state regulators over potential unlicensed gambling.

The sector’s growth is reflected in funding and institutional investment. Earlier this month, Kalshi raised over $1 billion in a funding round valuing the platform at $22 billion, while Intercontinental Exchange, owner of the NYSE, increased its investment in rival Polymarket to nearly $2 billion.

Kalshi’s margin trading will initially be limited to institutional clients and may first launch on new products before rolling out to core event contracts.