Kalshi Tops $5 Billion in Daily Trading Two Days Running, Mostly on Parlays

The prediction market platform Kalshi has achieved a significant milestone, trading more than $5 billion in notional volume on both Saturday and Sunday, marking the first time the exchange has reached this level on consecutive days. According to Kalshi's daily data files, the volumes reached $5.33 billion on Saturday and $5.36 billion on Sunday, both exceeding the previous record of $5.30 billion set on October 24.

The surge in trading was primarily driven by multi-leg contracts, which function similarly to parlays in sports betting. These combos made up 75.6% of Saturday's volume and 74.6% of Sunday's. This represents a significant increase from July, when such contracts constituted only 36% of Kalshi's trading volume, according to a Bloomberg analysis.

Record Growth in Trading Volume

Kalshi's trading activity has shown remarkable growth, with the record day volume more than quadrupling since June. The exchange first surpassed $1 billion in a single day in June, boosted by World Cup markets that lifted a Sunday to $1.236 billion. By September 20, the daily volume had reached $3 billion, and on October 11, it climbed to $3.96 billion. Sunday's $5.36 billion represents approximately 4.3 times the June mark.

The broader prediction market has expanded alongside Kalshi. Combined monthly taker volume at Kalshi, Polymarket, and Polymarket's US venue reached $172.4 billion in the third quarter, compared to $98.5 billion in the second quarter, according to FM Intelligence calculations.

Nature of Notional Volume

It's important to understand that notional volume values every contract at its full $1 payout, not at the price traders paid. This means a long-shot combo purchased for just a few cents contributes a dollar per contract to the total volume. Most of the weekend's combos were indeed long shots, with 85% of Saturday's combo volume and 79% of Sunday's consisting of contracts that traded below 5 cents.

Legal Challenges and Industry Response

The trading surge comes amid legal challenges for Kalshi. The American Gaming Association (AGA), representing the casino industry, filed an amicus brief in Kalshi's appeal against New York at the US Court of Appeals for the Second Circuit. The brief stated that Kalshi offers 'garden-variety sports bets, such as point spreads, proposition bets, and parlays.'

Citing data from Event Horizon, the AGA noted that parlays make up two-thirds of Kalshi's volume, with 55% being long shots featuring 10 or more legs. The association also estimated that users under 21 had wagered $9.5 billion on Kalshi by November 2, despite New York's prohibition on sports betting for individuals under 21. Kalshi accepts traders starting from age 18.

Kalshi is appealing after a federal judge in July declined to stop New York from enforcing its gambling law, and the Second Circuit refused it an injunction pending appeal on November 3. In a separate lawsuit, New York is seeking at least $36 billion from the exchange.