Trading this fall’s shutdown fight

I love the fall. The crisp mornings. The return of school and football. Sweater and chili season. And, of course, the annual government shutdown fight.

Historically, I’ve done well trading these events on Kalshi. My playbook has been simple: fade a shutdown, hold firm, and often add as prices dip. More often than not, the market overprices the drama, and the payoff comes when a last-minute deal is struck.

But is this fall’s showdown shaping up differently?

Follow Gaeten on X: @GaetenD

_{The opinions expressed are solely the author’s, a Kalshi user, not those of Kalshi Inc. or its affiliates, and do not constitute trading or investment advice. See full disclaimer below.}

Shutdown battles are a tradition as American as morbid obesity, and they’ve become one of the most reliable seasonal trades on Kalshi. Here are the most recent ones and how they played out for me:

March 2025 – Congress passes a continuing resolution at the last moment, averting a shutdown and earning me $4,600.

October 2024 – Congress passes a continuing resolution at the last moment, averting a shutdown and earning me $15,000.

March 2024 – Congress passes a continuing resolution at the last moment, averting a shutdown and earning me $1,400.

October 2023 – Congress passes a continuing resolution at the last moment, averting a shutdown and earning me $9,000.

So the play is easy, right? Just buy “No” and add to it as the deadline nears and the price dips.

Well…not so fast. There are reasons to think this time might be different (though it still might not be).

Democratic voters are itching for a fight.

If the recent rise in odds of a Newsom primary win in 2028 tells us anything, it’s that Democratic voters want someone who will stand up to Trump. Senate Democrats rolled over in March, but so much has happened since then to enrage their base. Members in Congress will want to show they’re listening.

Trump has given the Dems the middle finger over the 2025 budget.

By unilaterally cutting spending to agencies, laying off huge numbers of employees, and passing a rescission bill, Trump has made it clear that it doesn’t really matter what funding Congress passes. In the end, he’ll decide what money gets spent and where. This is an asymmetric tool: it’s far easier for Trump to not spend allocated money than it would be for a future Democratic president to spend money that hasn’t been appropriated. That leaves Democrats with very few weapons, and a shutdown fight is one of the only ones available.

The pocket rescission gambit.

A regular rescission is bad enough: it lets a simple majority claw back spending that originally required 60 votes to approve. But a pocket rescission is worse. It allows the president to cancel spending that required 60 votes without a single vote in Congress. The Democrats have warned Trump against making this move, but he is doing it anyway. Are they just going to take it?

The Democrats have no end game.

Let’s say Democrats listen to their voters and choose to fight. They shut down the government over the budget. Then what? Shutdowns are another asymmetrical weapon: Democrats care more about good governance, and shutdowns are the opposite of that. Republicans know this and know they can simply wait them out.

The final bill will be a continuing resolution.

Continuing resolutions don’t cut or increase spending. They just keep funding at the same level. It’s a lot harder to argue that it’s worth shutting down the government over a CR than it is over a budget that changes the status quo. That creates a messaging problem for Democrats as they try to assign blame.

Chuck Schumer is a p*ssy.

At the end of the day, the person with the most power over whether we get a shutdown is Senate Majority Leader Chuck Schumer. And he’s shown no willingness (or even capability) to stand up to Trump in the way the base demands. He rolled over in March, and the basic logic hasn’t changed even as voter anger has grown.

At this point, my dear reader, you’re probably thinking: “just tell me what the f*ck to do, Gaeten.” Unfortunately, this one doesn’t have a clean answer. I think this is the most likely scenario for a shutdown in several years, but the problems with Democrats actually pulling the trigger are the same as they’ve always been.

If I had to predict, I’d say Democrats will force a brief shutdown just to show that they’ve grown a set.

As for my strategy: I’ve loaded up on Yes shares in the low 40s. Shutdowns usually look imminent right up until the moment a deal gets done. Market prices reflect that tension, so even if there ultimately isn’t a shutdown, I should be able to profit on the ride up. Sometimes these fights fizzle before they get serious and the Yes side eats the loss, but that hasn’t been the case lately, and this one looks real. I expect Yes prices to rise before a resolution is reached.

When the deadline approaches, it’s all about separating the signal from the noise. Outlets like Punchbowl thrive on drama, even when the resolution is obvious. Here’s what I watch for:

Noise: House Republicans blocking a deal. Ignore it. They always fold.

Signal: If both sides are still separated by major issues heading into the deadline, or if leadership looks dug in with no off-ramp, then a shutdown is genuinely on the table.

Happy trading and enjoy the September drama.

^{The views and opinions expressed in this article are solely those of the author, a Kalshi user writing under an alias, and do not represent the views of Kalshi Inc. or its affiliates. This content is provided for informational and educational purposes only and should not be construed as investment, trading, financial, or legal advice. Trading on Kalshi involves risk and you should carefully consider your financial situation and consult with a qualified advisor before making any trading decisions. Past performance is not indicative of future results.}