It is a common problem resulting from not enough light and too much heat. You can correct for it by transplanting them deeply - you bury all that bare stem - when you pot up. Raising the light is not the solution and only makes it worse. The solution is a small fan - standard recommendation you'll see in the many discussions here about this problem. You have to reduce the ambient air temp around them.

So transplant them again - deep - and drop the light back where it belongs and set up some way to move and cool the air around them.

For future reference you might want to do some reading here too about the problems with those peat pots. Be sure to strip it all off when planting them in the garden.

Dave

What is your climate? It is possible you could put those seedlings straight out into the garden now (once hardened off, of course).

I always winter sow my kale. Easy peasy! They grow much better that way. Check the winter sowing forums for more info on how to do it.