Kalshi is facing pressure in multiple states, and fellow companies such as Crypto.com and Robinhood – potentially Polymarket before long – are unlikely to avoid the same fate. Kalshi’s rapid growth, however, has made it a prime target for gambling regulators and attorneys general who are continuing to push back against its expansion.
Local Lawsuits Unlikely to Give Clearer Guidance on Prediction Markets Yet
In a conversation with Stifel analyst Jeffrey Stantial, Andrew Kim, partner at Goodwin Proctor LLP, suggests that the matter may not be settled on a state level. Rather, prediction markets would need a federal-level resolution, not least because Kalshi’s main line of defense is insisting that it is regulated by the Commodity Futures Trading Commission.
Stantial believes that over the coming years, and possibly as early as 2026, SCOTUS will start weighing in on cases that involve challenges to prediction market operations, as the ones already in motion in places such as Nevada and Massachusetts.
The exact timeline is still a moving target. This also comes from the fact that SCOTUS itself may be waiting to see what high courts think of the case, which essentially boils down to this: since Kalshi is a CFTC-regulated entity, its sports event contracts are subject to federal laws that regulate such products.
On the flipside, there are critics who say that this is essentially a loophole exploiting a vulnerability in the original intention and phrasing to offer “yes/no” sports betting. If the latter is proven, Kalshi would end up in a situation where it has been offering “sports betting” without a license.
SCOTUS Would Have to Get Its Hand Dirty – Sooner or Later
How this plays out is increasingly difficult to predict. President Donald Trump’s son, Donald Trump Jr, has already joined Kalshi and Polymarket as an advisor, and this has landed a political hue, suggesting that Democratic-leaning lawmakers are more belligerent to the matter, whereas Republicans are inclined to give prediction markets “ a pass.”
This is purely speculative, however, as both Republican and Democratic-held states have voiced concerns and frustration over prediction markets. With no definitive ruling, prediction markets platforms can expect to face mounting legal pressure over the coming years.