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- Speaking at DC Fintech Week, Kalshi CEO Tarek Mansour warned that a state-by-state regulatory approach would push prediction markets offshore, maintaining that event contracts serve legitimate economic hedging functions and fall exclusively under CFTC authority.
- The warning comes as New Jersey, backed by 40 states and the NFL, petitions the U.S. Supreme Court to reclassify sports event contracts as state-regulated gambling, while Kalshi separately denied claims of trade volume inflation in its bitcoin and ether perpetual futures markets.
Kalshi is warning that a state-by-state regulatory approach could push U.S. prediction markets offshore as its fight with state authorities over event contracts moves closer to possible U.S. Supreme Court review.
Kalshi Chief Executive Tarek Mansour said at DC Fintech Week that “the central question is not whether states or Washington should share oversight, but whether prediction markets can continue operating in the U.S. at all.” The dispute matters because it could determine whether event contracts remain available under federal financial rules or are treated by states as illegal sports wagering.
Kalshi and the CFTC are arguing for federal control
According to the source report, Kalshi and the Commodity Futures Trading Commission say prediction markets are federally regulated financial products and should remain under the agency’s sole supervision. Mansour also said, “state-led oversight of U.S. prediction markets would push them out.”
States including New Jersey have taken the opposite position, arguing that some of Kalshi’s event contracts amount to illegal sports wagering. New Jersey is now seeking Supreme Court review in the broader dispute.
The legal picture is unsettled. The report says federal appellate courts have split, with one major ruling backing Kalshi and two supporting the states’ argument.
Mansour said sports-related event contracts have clear economic consequences and fit commodity definitions under the Commodity Exchange Act, reinforcing Kalshi’s position that the products belong under federal oversight rather than state gambling regulation.
Rulemaking and court action could shape what happens next
The CFTC has already issued one rule and proposed another aimed at placing event contracts within the definition of swaps, according to the report. The stated goal is to clarify that event contracts are policed by the CFTC instead of state gambling authorities.
That means the next major developments for the industry may come on two fronts:
- whether the Supreme Court agrees to hear New Jersey’s challenge
- whether the CFTC finalizes or advances the proposed rule changes referenced in the report
Outside groups, including the National Football League, have also submitted views to the court, underscoring how closely traditional sports stakeholders are watching the case.
Separately, Kalshi rejected allegations that it inflated trading volumes in bitcoin and ether perpetual futures markets. Mansour said the trading patterns cited by critics reflected fixed-size orders from market makers.
For operators and regulators, the central unanswered question is whether U.S. prediction markets will continue under a federal regulatory framework or face a fragmented state-by-state fight that could reshape where the business operates.
Source: As reported by tradersunion.com.
