Kalshi Pushes to Repeal 1958 Onion Futures Ban Tied to Price Scandal
Prediction market startup Kalshi is targeting a decades-old law that bans futures trading on onions and box office receipts.
A niche federal law dating back to 1958 has emerged as an unexpected obstacle for Kalshi, the prediction market startup seeking to expand the universe of events on which Americans can legally wager. The Onion Futures Act, passed in the wake of a brazen scheme to manipulate onion prices in the 1950s, explicitly prohibits futures contracts on onions — and, in a later extension, on box office receipts.
Kalshi is now lobbying to repeal the law, arguing that its restrictions are an anachronistic holdover that limits modern financial innovation. The company contends that prediction markets, which allow participants to trade contracts tied to real-world outcomes, should be free to cover a broader range of underlying commodities and data.
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The original legislation was a direct response to a price-rigging scandal in which traders flooded the market with onions, driving prices to near zero before cornering the supply and engineering a rebound. Congress moved swiftly to close that loophole, making onions the only specific commodity ever singled out for a categorical futures ban in U.S. law.
The inclusion of box office receipts in the statute reflects a later legislative effort by Hollywood studios, which successfully argued that allowing futures contracts on film performance could create incentives to manipulate or sabotage releases. That provision has drawn renewed scrutiny as prediction markets seek to expand into entertainment and media categories.
The push to undo the law underscores the regulatory ambitions of prediction market platforms as they test the boundaries of what federal law permits them to offer. Continue reading at NYT > Business.
