Supreme Court Could Decide Kalshi’s Fate?

A New Play in Betting

Kalshi, a CFTC-approved platform, argues its event contracts aren’t gambling but derivatives for hedging risk, with solid predictive value. Their big win in Nevada, where a judge granted a preliminary injunction blocking state crackdowns, shows prediction markets can take on state gambling laws. Still, with no clear line between betting and contracts, the betting industry’s future hangs in the balance.

Kalshi’s stance is bold: as a designated contract market under the CFTC, federal law trumps state gambling rules, Kim explained. Their contracts, tied to events with economic impact like sports outcomes, differ from bets since Kalshi earns fees, not profits from results.

But traditional sportsbooks see Kalshi’s trades as betting in disguise, Kim noted. States like Nevada, New Jersey, and Ohio hit Kalshi with cease-and-desist orders, claiming it skirts local laws. Kalshi’s fighting back, and its Nevada injunction lets it keep offering contracts for now.

Legal Fights and Big Risks

Kim highlighted Kalshi’s Nevada case as a game-changer. The judge, calling the issue complex, paused state enforcement, hinting at a possible out-of-court deal, though Kim doubts Nevada’s regulators, guarding a $14.6 billion market, will budge. Kalshi’s argument, that CFTC rules override state laws, got a boost, but Kim warned the fight’s far from over.

If Kalshi keeps winning, smaller sportsbooks could take a hit, while giants like DraftKings might jump into prediction markets.

The Wire Act of 1961, banning interstate betting data, is another hurdle, Kim said. If courts rule event contracts aren’t bets, the Act won’t apply, but the American Gaming Association flags it as a risk.

Tribal gaming groups also loom large, per Kim. They see Kalshi as a threat to their California betting revenue and may sue under the Indian Gaming Regulatory Act.

What’s Next for Kalshi

Kim sees Kalshi’s future tied to its aggressive push across states. Nevada’s win is a solid step, but New Jersey and Ohio cases could drag on, maybe hitting the Supreme Court in a year or two, per Kim’s take.

Unlike Kalshi, firms like Robinhood play it safe, avoiding fights to protect their broader licenses. Kim also touched on parlays in prediction markets, noting liquidity issues, not legal ones, as the main barrier.

The CFTC’s Rule 40.11, which flags illegal activities, complicates things, but Kalshi insists its contracts are legit.