Polymarket, Kalshi contract limits demonstrated in latest U.S. government shutdown fight

The U.S. government is set to partially shut down at midnight, despite the Senate voting in favor of a funding package intended to keep the government running — showing the importance of specificity in prediction market contracts.

The House of Representatives is out of session this week, and will not be back until Monday. Because the House needs to pass the package the Senate voted on Friday evening, this means that the government will technically shut down at 12:00 a.m. ET Saturday, and likely remain shut through the weekend. It's just a partial shutdown and should not have a significant effect on U.S. residents.

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In this way, the shutdown differs radically from the previous U.S. government shutdown, which was the longest in the nation's history and saw federal employees go unpaid for well over a month while lawmakers negotiated over forthcoming healthcare premium increases.

Polymarket and Kalshi contracts letting users bet on whether the government will shut down or not ranged in how exactly they defined a government shutdown, demonstrating the importance of specificity for these event contracts.

"This market will resolve to 'Yes' if the U.S. Office of Personnel Management (OPM) announces another federal government shutdown due to a lapse in appropriations by January 31, 2026, 11:59 PM ET. Otherwise, this market will resolve to 'No,'" one contract read. Under the terms of this contract, a partial shutdown qualifies as a shutdown, but importantly, it is dependent on OPM announcing a shutdown.

Earlier Friday evening, it gave the odds as being 88%, having climbed steadily from 40% over the past 24 hours despite reporting from Thursday making it clear that the House would not be able to vote before Monday.

A similar Kalshi contract likewise pointed to OPM as its way of verifying the outcome of the bet. The odds of a shutdown were 93% at press time, having climbed from 44% over the past 24 hours.

OPM's media response email did not immediately return a request for comment on whether it would announce a shutdown.

Other bets were more specific. One Polymarket contract allowed users to bet how long the government might remain closed, with one, two and three-plus days all seeing 90%+ chances at press time. A Kalshi counterpart suggested bettors gave "more than [two] days" over 90% odds.

Yet another Polymarket contract asking whether government funding would lapse on January 31 stood at a 99.6% chance at press time, defining a lapse as "the President failing to sign the relevant bill(s) extending government funding" by 11:59 p.m. ET on Friday night — which, again, he can't do until the House votes on the package on Monday.