Recently, prediction market startup Kalshi sued New Jersey and Nevada. The states had attempted to shut down Kalshi’s previously launched sports trading operation. In the lawsuit, Kalshi argued that state gaming commissions lack the authority to set rules for the company. It claimed the platform operates under federal regulation.
Last week, Tarek Mansour, CEO of Kalshi, said at a StrictlyVC event in San Francisco that they are not overly concerned. He explained that they are regulated at the federal level. The state law doesn’t really apply.
The startup could secure its place in the lucrative market of sports betting if Kalshi wins these lawsuits. Yet, the legal challenge may also pave the way for a clash between state regulators and the Trump administration.
This isn’t the first time Mansour has challenged the authority of a regulator. Kalshi won a major legal battle against the CFTC or Commodity Future Trading Commission in 2024, letting it to process more than $1 billion in trades based on the outcome of political elections in the previous year.
In battling the CFTC, Mansour said that they’ve had to eat a lot of s— over the last five years. He’d do it again in heartbeat.
Kalshi made the leap in January into prediction markets for sporting events. This allows users nationwide to bet on the outcomes of March Madness and the Super Bowl. This includes users in the 11 states where gambling is illegal.
Nonetheless, six states where sports wagering is legal sent Kalshi cease-and-desist letters. They claim that its sports prediction markets are de facto sports betting. These include Nevada, New Jersey, Illinois, Maryland, Ohio, and Montana. State gaming commissions argue that Kalshi lacks proper licensing. They also claim that Kalshi is not paying state taxes on the sports trades it offers.
Mansour said that they have a license. It’s by the CFTC.
Onstage, Mansour argued that the real motivation behind the cease-and-desist letters was a powerful casino lobby. He claimed the lobby is unhappy about Kalshi’s sports trading contracts.
