These moves underscore the rapidly evolving regulatory landscape. In May, the CFTC dropped its appeal of a federal judge’s ruling that allowed Kalshi to accept bets on US elections.

Meanwhile, during his June Senate confirmation hearing, Trump’s pick to lead the CFTC, Brian Quintenz, suggested that he wouldn’t stop the expansion of prediction markets. That includes sports event contracts.

DOJ and CFTC Drop Investigations into Polymarket

In a significant win for crypto-based prediction markets, Polymarket received notice from the DOJ and CFTC that they’ve dropped all inquiries into the company over potential violations involving US-based users.

The platform has been under scrutiny since its 2022 agreement with the CFTC, which prohibited it from accepting US customers. Polymarket made the assurances following the commission’s $1.4 million fine to Polymarket.

A few days after the 2024 presidential election, the FBI raided founder Shayne Coplan‘s residence in New York City. The agency seized his cellphone and other electronic devices. He was not arrested or charged.

Coplan blamed the Biden administration for the highly publicized raid, which sparked speculation in crypto circles and political media. Critics suggested the raid had political motivations, meant to punish the company, which predicted Trump would comfortably beat Harris.

Trump has not endorsed Polymarket. Still, he has referenced the platform’s polling-style predictions during his presidential campaign, highlighting his favorable odds.

The president also invited Coplan to his crypto summit in March. In that event, Trump said he’s ending the government’s war on crypto.

PredictIt Wins Key Regulatory Relief

In another major development, political prediction market PredictIt announced that it has entered into a revised agreement through a no-action letter with the CFTC, which will allow it to significantly expand its operations. The new terms include:

• Removal of the current 5,000-trader limit on contracts.
• The maximum individual position limit has increased to $3,500, up from $850.
• Expansion of markets.

Additionally, PredictIt’s governance will transition to a new non-profit entity, named the “Prediction Market Research Consortium.” Academic advisors from Princeton, Rutgers, and Wake Forest will guide the entity.

The change showcases PredictIt’s commitment to research. It also reinforces its role as a valuable tool for academia, the media, and the public.

The platform initially launched in 2014 as a research project by Victoria University of Wellington in New Zealand. As a research project, it was permitted to operate in the US under a no-action letter from the CFTC, subject to certain conditions.

In 2022, the CFTC withdrew the no-action letter and ordered PredictIt to shut down. However, the platform secured a temporary injunction by the Fifth Circuit Court of Appeals, which has allowed it to continue operating.

A Transforming Landscape for Prediction Markets

As Polymarket and Predict gain momentum, Kalshi, another prominent player in the sector, continues to face legal challenges.

Although the CFTC, which oversees prediction markets, withdrew its appeal against Kalshi regarding political markets, the platform is battling on several fronts regarding its sports event markets, which are the primary driver of Kalshi’s business.

Kalshi has won some legal battles. However, an ongoing case in Maryland could prove decisive for the future of sports event prediction markets. If Kalshi prevails, that could open the door for others such as PredictIt (and possibly Polymarket if it obtains US approval).

Additionally, if the courts determine that sports event contracts fall under federal jurisdiction, major sports betting operators like DraftKings and FanDuel, which are reportedly already preparing for potential entry, will likely move into the space.

The post US Prediction Markets Get Green Light: Polymarket Cleared, PredictIt Expands appeared first on CasinoBeats.

The Lincoln Policy Group, founded by Sen. Lincoln, received $180,000 in payments from Kalshi, and Lincoln registered as a lobbyist for Kalshi last year. 

Lincoln’s letter to the CFTC supports the argument Kalshi has frequently made in court cases against state regulators, that prediction markets are governed at the federal level and beyond state control. 

“It is crucial that the CFTC make clear that all prediction markets fall entirely under its domain with no interference by states,” Lincoln wrote in the letter. 

“If a formal rule is necessary to achieve this goal, then the agency should not hesitate to act.”

Lincoln Implores CFTC to Let Markets Decide

After a change in administration, the CFTC has softened its stance towards the expansion of prediction markets into political and sports markets. 

Incoming Chair Brian Quintenz, a board member at Kalshi, indicated his openness to further expansion at a Senate hearing last month, despite opposition from state regulators and tribal groups. 

In a court case against Kalshi in New Jersey, 34 states, as well as over 60 tribal groups, and the American Gaming Association (AGA), all submitted briefs against sports prediction markets. 

The case is ongoing, as are legal battles in Nevada and Maryland, but Kalshi has so far secured favorable rulings from judges, allowing its markets to be offered in all 50 states. 

Lincoln believes that the CFTC should not cave to increasing pressure from states and tribes, among others. 

“Not surprisingly, the CFTC faces a lot of pressure right now to ban prediction markets, especially contracts tied to political elections or sporting events,” she wrote. 

“This would be a grave mistake for a number of reasons, and it would fly in the face of the agency’s long-standing policy of letting the markets decide.“

Lincoln Letter Contradicts Previous Comments

As highlighted by InGame, Sen. Lincoln’s recent letter to the CFTC stating support for sports prediction markets is in contrast to previous comments. 

During a 2010 Senate conversation, Lincoln said: “It would be quite easy to construct an ‘event contract’ around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament. These types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling.”

These words have been used in briefs filed against Kalshi in its legal fight in Maryland. However, in the letter, Lincoln writes a direct contradiction, stating that she now believes the Super Bowl does have a real commercial purpose.

From the letter, Lincoln states, “Sporting events like the Super Bowl also have strong commercial value because they have major impacts on advertising, apparel sales and the hospitality industry to name a few.”

The change in stance from Lincoln may well indicate that Kalshi’s lobbying efforts are paying off. According to Dustin Gouker at the Next Event Horizon, the company has spent $1 million on federal lobbying over the past five years. 

The post Lobbying Bet Pays Off for Kalshi as Former Senator Supports Prediction Markets appeared first on CasinoBeats.

Front Office Sports broke the news on Monday. Neither company has confirmed the news, with a DraftKings spokesperson telling FOS that its discussions with other businesses are part of normal operations.

While unconfirmed, the move signals DraftKings’ strong interest in a highly debated market that offers an alternative under federal oversight to traditional sports betting. Notably, DraftKings applied for a market prediction license but withdrew the application in April.

Railbird was founded in 2021 by Miles Saffran and Edward Tian, former Point72 Asset Management executives. Point72 is the family office run by former hedge fund boss Steven Cohen.

Railbird is yet to launch, but it has secured the regulatory approval to operate nationwide. For DraftKings, a potential acquisition would mean a shortcut to access prediction platforms without going through the lengthy licensing process it would have if it continued with its application.

As prediction markets are federally regulated, DraftKings would also significantly benefit from getting access to a new customer base. That includes the nation’s largest states, California and Texas, where sports betting remains illegal.

The move would be strategic as many observers expect a wave of consolidation between sportsbooks and prediction markets ahead of the football season.

FanDuel Explores Partnership with Kalshi

DraftKings is not the only one eyeing prediction markets. Last month, reports surfaced that FanDuel is exploring a deal with Kalshi, the leading prediction markets platform in the US. However, unlike DraftKings, FanDuel is potentially looking into a partnership rather than an acquisition.

A potential partnership would be beneficial to both companies. FanDuel would enter new markets from a ‘sports betting’ perspective, adding to its existing DFS product in many states.

The sports betting market leader would also gain access to new “betting” verticals. Furthermore, the deal would help alleviate state tax burdens, as Kalshi falls under CFTC oversight.

Meanwhile, Kalshi would benefit from getting exposure to FanDuel’s 12 million active users. The company may also gain access to FanDuel’s advanced tech-stack, including payments and compliance infrastructure.

That could help Kalshi boost liquidity across markets. With a large influx of new users, the market volume could rise, making them more efficient and engaging. Through FanDuel, Kalshi could also receive more exposure and become a household name.

FanDuel or Kalshi have not confirmed the possible partnership. Still, these discussions highlight the intense interest among major operators in blending prediction markets with more traditional wagering products.

Kalshi Faces Legal Challenges Despite Federal Backing

Kalshi has experienced rapid growth, especially since the beginning of the year when it started offering sports event contracts. However, the growth has not come without significant legal pushback.

Several states have raised the alarm and claim that Kalshi’s sports event contracts are a form of illegal gambling. Regulators from states like Nevada, New Jersey, Maryland, and Ohio sent Kalshi cease-and-desist letters, arguing that the events violate state gaming laws.

In response, Kalshi launched legal challenges asserting that its operations fall under federal law and thus preempt state restrictions. The platform scored some early wins, with judges blocking the cease-and-desist orders in New Jersey and Nevada.

At the heart of the dispute between Kalshi and the states is whether event contracts, and sports event contracts in particular, should be regulated as financial derivatives or traditional bets.

In the Maryland case, a judge questioned Kalshi’s conflicting statements on the matter. The prediction markets platform’s claim that event contracts fall under CFTC oversight collided with an earlier argument that those same contracts lack economic significance, thus not falling under CFTC governance.

The outcome of the Maryland case could have far-reaching implications for the gambling industry and the future of state versus federal oversight.

A Transformative Moment for US Betting

The outcome of Kalshi’s legal battles could reshape the US betting as prediction markets could become the next frontier of expansion.

Both FanDuel and DraftKings are already signaling interest, potentially laying groundwork to leverage shared exchange-sports betting infrastructure. That will allow them to enter new markets and potentially sidestep state gambling taxes.

Adding momentum, CFTC Chair nominee Brian D. Quintenz has signaled openness to expanding sports prediction markets under federal oversight. If the courts affirm federal preemption over state laws, these platforms will undoubtedly experience rapid expansion.

Prediction markets can also offer sportsbooks a way to engage users in the off-season through different “betting” categories. Examples include politics and macroeconomic indicators.

As the lines between sports betting and sports event prediction markets continue to dissolve, the next few months could be critical for the future of sports betting in the US.

The post DraftKings Eyes Railbird Acquisition as Prediction Markets Threaten to Disrupt Sports Betting appeared first on CasinoBeats.

A few weeks ago, during the NBA and NHL playoffs, sports accounted for over 80% of trading volume at the prediction markets site. But, with US sports in a quiet period, alternative markets such as the annual eating contest attracted attention. 

Event Horizon tracks the world of prediction markets and notes that Kalshi saw a decline in sports trading recently. 

MLB contests were still the most popular markets on the site. UFC fights, Club World Cup soccer matches, and WNBA games were also among the platform’s most traded events. 

Nathan’s Hot Dog Eating Contest accounted for 4% of overall volume. The winner of the Democratic primary for mayor in New York City was the most traded non-sports market. 

Sports Dominate Prediction Markets Despite Opposition

The top 20 markets for Kalshi last week accounted for less volume than the NBA alone did the previous week. This highlights that the site has become increasingly reliant on sports markets since expanding into the territory in January this year. 

The expansion has been met with strong opposition from states that accuse the platform of offering unlicensed sports betting. 

Seven states issued Kalshi cease-and-desist letters. However, rather than take a step back from sports markets, Kalshi responded by filing counter lawsuits in Nevada, New Jersey, and Maryland. 

So far, judges have ruled in Kalshi’s favor. In Nevada and New Jersey, judges granted preliminary injunctions that allow the company to continue operations in the states for the time being. 

In the case in New Jersey, 34 states, as well as over 60 tribal groups, and the American Gaming Association (AGA) submitted briefs to the court opposing sports prediction markets. 

The briefs accuse Kalshi of hypocrisy. The company claimed in court that it does not offer betting, but rather gives users opportunities to trade on events with “real-world financial consequences”. However, it was highlighted that Kalshi has frequently run ads that state the platform is offering “legal sports betting in all 50 states”. 

States, therefore, argue that it should be regulated in the same way as sports betting. That means applying for a license, paying taxes on revenue, and being restricted in states that have not yet legalized gambling on sports. 

Courts are mulling over how to balance state betting rules with the Commodity Exchange Act (CEA), which regulates event contracts, While that happens, Kalshi has ramped up its sports markets. 

Whereas the first sports-related markets focused on long-term futures, users can now trade contracts on single-match winner markets in the NBA, NHL, MLB, NFL, soccer, and tennis. An upturn in trading volume is expected for the coming weeks on Wimbledon matches. 

Sports Leagues Warn Of Prediction Markets Expansion

Sports leagues have also voiced concern about Kalshi’s expansion. The NBA sent a letter in May to the Commodity Futures Trading Commission (CFTC), warning of the risks that sports prediction markets pose. 

“Without oversight and regulation tailored to the specific circumstances of sports wagering, the integrity risk posed by sports prediction markets are more significant and more difficult to manage than those presented by legal, regulated sports gambling,” wrote Alexandra Roth, the NBA’s vice president.

The NFL and MLB also sent letters to the CFTC expressing their concern. 

Jonathan D. Nabavi, NFL VP of Public Policy and Government Affairs, wrote in the NFL’s letter, “These contracts would mimic sports betting but seemingly without the robust regulatory features that accompany regulated and legalized sports betting and which help to mitigate threats to the integrity of our contests.”

CFTC Shifts Stance Under New Administration

The CFTC, however, has been reluctant to place any restrictions upon Kalshi and the expansion of sports prediction markets. Under the previous administration, the organization ordered Kalshi to remove its market on the US presidential election. 

Kalshi, as it has done with state regulators, filed a counter lawsuit against the CFTC. It won its legal battle. A federal judge ruled that the market did not harm the public as the CFTC had stated. This made it legal under the CEA. 

Kalshi quickly reinstated the market. Since Donald Trump has taken over the US Presidency from Joe Biden, the CFTC has shifted its stance. Donald Trump Jr. took up a role as a strategic advisor at Kalshi. Kalshi board member Brian Quintenz was nominated by the president to lead the CFTC. 

Quintenz stated he will resign from his position at Kalshi upon taking up the role as CFTC chair. His ties to the company mean he is unlikely to introduce measures against the expansion of political and sports markets. 

The ability of Kalshi to continue expanding saw the company valued at $2 billion in a recent round of funding. Rival prediction market site Polymarket was valued at half that, around $1 billion in its recent round of funding. 

Polymarket Also Expanding Its Sports Trading Options

Polymarket is unlicensed in the US and was fined $1.4 million by the CFTC for accepting US users. The platform has, however, made a partnership with Elon Musk and the social media platform X. That partnership could lead to further expansion. 

Kalshi had initially announced that it had made a deal with Musk and xAI. However, Kalshi was forced to retract the announcement after X denied the partnership had been agreed. 

Similarly to Kalshi, sports markets account for a growing percentage of Polymarket’s business.

The post Sports Markets Continue To Drive Kalshi’s Business, Including Hot Dog Eating Contest appeared first on CasinoBeats.

The timing of the reported discussion is noteworthy. About a month ago, FanDuel’s parent company, Flutter Entertainment, acknowledged that the company is keeping an eye on prediction markets.

During the company’s Q1 Earnings Call, Peter Jackson, Flutter CEO, said the company is evaluating the potential of prediction markets.

At the time, Jackson noted that prediction markets do offer opportunities, but they can’t match the excitement of parlays, which are the most popular type of bet. Still, he added that the company is exploring options.

Last year, Kalshi won a legal battle against the US Commodity Futures Trading Commission (CFTC), which allowed it to offer election prediction markets. Shortly after the beginning of the year, the platform also introduced sports event predictions.

These prediction types are available to users in all 50 states. While multiple state gambling regulators have raised concerns and threatened Kalshi, the platform has continued to grow its sports event prediction offerings.

Prediction Market Product Could Increase FanDuel Sports Betting Presence

A potential partnership could benefit both parties.

For FanDuel, the deal can enable it to operate in all 50 states. That includes entering markets such as the nation’s largest states — California, Texas, and Florida — where sports betting remains prohibited (or restricted to one platform in Florida’s case).

Additionally, Kalshi is regulated at the federal level by the CFTC, which would allow FanDuel to bypass state regulations and access over 20 new markets for sports betting without additional licensing hurdles.

Partnering with Kalshi would help FanDuel alleviate state tax burdens, especially in states with high tax rates. A partnership could allow the operator to avoid measures such as the recently announced 50-cent surcharge in Illinois. It could move users in those states to federally regulated sports event contracts.

In addition to financial and expansion benefits, Kalshi’s unique markets, such as elections and pop culture events, could open the door for FanDuel to tap into new verticals that are currently not allowed under existing gambling laws. FanDuel still has a significant DFS presence which following the repeal of PASPA has been translated into sports betting dominance.

Adding prediction markets as a sports betting ‘lite’ product could further solidify the company’s front runner position in the United States.

Liquidity Issues Could Disappear

Kalshi stands to benefit from a FanDuel partnership significantly. A deal would give the platform access to FanDuel’s over 12 million active users.

That could help Kalshi boost liquidity across its markets. The influx of new users could raise the volume of markets, making them more efficient and engaging to everyday traders. The access to new users could also help Kalshi become a household name much faster than it would on its own.

The event prediction platform could also greatly benefit from FanDuel’s top-rated front-end user experience, as well as other technological advancements, such as payments and compliance infrastructure technology. However, it is unknown

These new capabilities could further help accelerate Kalshi’s growth and product innovation. That includes potentially features like parlay-style event predictions.

Legal Risks Loom Over the Opportunity

Despite the potential of a Kalshi-FanDuel partnership, any deal hinges on Kalshi prevailing in its legal battles with state regulators.

Not long after the platform began offering sports event picks, state gambling regulators began questioning whether this was legal. That was followed by several cease-and-desist orders by states such as New Jersey, Maryland, Nevada, Ohio, Arizona, and Montana.

Kalshi responded by suing the regulators of New Jersey, Nevada, and Maryland. The company has already scored early wins with federal courts blocking the cease-and-desist orders in New Jersey and Nevada.

At the federal level, the CFTC, which oversees Kalshi, is currently vetting a new chair. The nominee, Brian Quintenz, currently sits on the Kalshi board. However, he has stated he will resign and recuse himself if confirmed.

While Quintenz has pledged to recuse himself from matters related to the company, he recently indicated that prediction markets, including those related to sports, fall under federal jurisdiction under the Commodity Exchange Act. That’s unless Congress or the courts decide otherwise.

One case that could clarify the picture is the one in Maryland. The federal judge scrutinized Kalshi for conflicting positions regarding sports event predictions.

While the company now claims that these predictions fall under CFTC authority, it previously asserted the opposite in a case against the CFTC. If the judge rules against Kalshi through measures such as judicial estoppel, it could represent a breakthrough for state regulators.

However, amid regulatory uncertainty, a potential partnership between Kalshi and FanDuel could signal a trend in the industry of the convergence of sports betting and prediction markets.

The post FanDuel Reportetly Eyes Kalshi Deal Amid Prediction Market Expansion and Legal Uncertainty appeared first on CasinoBeats.

During the US Senate Committee on Agriculture, Nutrition, and Forestry hearing, Quintenz stated that, under the Commodity Exchange Act (CEA), events on nearly all markets are permitted. He also indicated that native American tribes could, in theory, offer event contracts.

Sports Prediction Markets and the Commodity Exchange Act

One topic on many people’s minds was Quintenz’s stance on sports event contracts. These types of contracts have grown in popularity on platforms like Kalshi. Many lawmakers and state regulators view them as an unregulated form of gambling.

Sen. Adam Schiff (D-California) expressed concerns about these types of contracts:

“Well, in my view, betting on the outcome of a sporting event looks like sports betting, looks like gaming, smells like gaming, sounds like gaming, there are winners and losers like gaming, it’s probably gaming.”

Quintenz responded by emphasizing that CEA governs such markets:

“I believe that I need to abide by the Commodity Exchange Act…I believe the Commodity Exchange Act is very clear about the purpose of derivatives markets, the purpose of risk management and price discovery, and that events can serve a function in that mandate. I believe the Commodity Exchange Act is very clear about the purpose of derivatives markets, the purpose of risk management and price discovery, and that events can serve a function in that mandate.”

He added that if a conflict arises between the CFTC’s interpretation and state gambling laws, stating: “I believe that’s best resolved through Congress.”

When asked whether states should be able to block CFTC-approved products, the nominee reaffirmed that the commission’s role is to oversee event contracts.

Quintenz did not explicitly state that sports event contracts are commodities under the CEA. Still, he suggests that he views event-based derivatives, including those tied to sports, under the CFTC’s authority.

Tribes Could Participate in Sports Prediction Markets

Sen. Schiff raised a question about sports prediction markets possibly challenging tribal sovereignty:

“I’m proud to represent more than a hundred federally recognized tribal nations in California that have the exclusive right to offer gaming in California and I am very concerned that these event contracts, which seemed pretty indistinguishable, at least from the consumer point of view, from gaming, violate tribal sovereignty, undermine state and tribal gaming compacts, and conflict with the Indian Gaming Regulation (sic) Act.”

Schiff added that, under Federal law, Native tribes have the authority to police gambling within their territories. He questioned whether Quintenz would consider that when reviewing sports event contracts.

The CFTC Chair nominee acknowledged the Senator’s concerns and said he would engage with tribal stakeholders: “Nothing in the CEA that I’m aware of prohibits or affects the opportunity of tribes to offer those products and those markets and those services.”

The nominee stopped short of directly approving tribal-ran sports event contracts. However, his comments point in that direction.

While in Schiff’s home state of California, many tribes oppose sports betting, those in other states have pursued the idea.

In Alabama, the Poarch Band of Creek Indians has advocated for the expansion of gambling, including sports betting.

In Oklahoma, the Native American tribes have been attempting to renegotiate the gaming compacts to include sports betting. However, their tense relationship with Gov. Kevin Stitt has been an issue. Earlier this year, two bills were introduced to give the tribes exclusivity over sports betting. They passed the House but ran out of time in the Senate.

Meanwhile, in Florida, the Seminole Tribe holds a monopoly over sports betting after prevailing in legal battles. However, sports prediction events could open a way for other tribes in the state to offer “sports betting.”

Conflict of Interest Questions over Kalshi

Quintenz currently sits on the board of Kalshi, a position he has stated he will resign from if confirmed as Chair of the CFTC. In his ethics agreement, he pledged to recuse himself from matters related to the company for one year.

However, Sen. Cory Booker (D-NJ) expressed concerns about Quintenz’s relationship with Kalshi and the company’s addition of Donald Trump Jr. The president’s son was hired as a strategic advisor just a week before his father was sworn into office and days before Kalshi started offering sports event contracts:

He commented: “And so I’m worried that you’re going to be in a position where, if chairman, are you going to feel empowered to prosecute a company or push back on a company that’s being advised by the president’s son?”

Booker framed the issue within broader concerns about corruption and transparency. He also mentioned President Trump’s association with financial ventures, including a meme coin.

As the hearing’s time expired, Quintenz gave a short response: “I would pledge to have that conversation with you and to have that relationship.”

Kalshi’s Ongoing Legal Battles Could Shift the Landscape

While the CFTC chair confirmation is ongoing, Kalshi is fighting legal battles on many fronts. Several state gambling regulators have ordered the platform to stop offering sports contracts, to which Kalshi has filed lawsuits.

Sen. Booker’s state of New Jersey is among those, but in April, a federal court backed Kalshi and blocked the New Jersey Division of Gaming Enforcement from enforcing its cease-and-desist order. Recently, Nevada regulators suffered a similar fate.

However, the ongoing case in Maryland could provide clarity on sports event contracts. The federal judge scrutinized Kalshi for presenting conflicting positions in court compared to a previous case against the CFTC.

In that case, Kalshi claimed that sports event contracts have no economic value and are therefore not subject to CFTC regulations. However, in the Maryland case, it says the opposite.

This change of positions could result in the court applying judicial estoppel. Judicial estoppel is a legal principle that prevents a party from contradicting earlier statements in court, ensuring fairness and consistency.

If the judge rules against Kalshi, it could represent a breakthrough for state regulators. It could also reshape the regulation of sports event contracts nationwide.

The post CFTC Chair Nominee Quintenz Signals Openness to Expanding Sports Prediction Markets appeared first on CasinoBeats.

Through an X thread, US gaming and sports betting attorney Daniel Wallach shared key exchanges between the court and Kalshi lawyers.

Judge Abelson specifically challenged the platform on why it has changed its stance on sports event contracts compared to its arguments in its case against the Commodity Futures Trading Commission (CFTC).

The judge also stressed a key issue, whether Congress intended to preempt state regulations for sports event contracts.

To gain further clarity, Judge Abelson requested supplemental briefings from both sides to clarify how Kalshi’s statements in previous cases should inform the court’s view.

Court Challenges Kalshi’s Conflicting Legal Positions

Kalshi has launched a series of lawsuits against several state regulators, including MLGCC. The lawsuits are a result of cease-and-desist letters from MLGCC and the others, who argue that the platform is conducting illegal gambling through its sports prediction event contracts.

Kalshi argues that the contracts, essentially wagers, are legitimate derivative contracts. Those contracts are overseen and regulated by the CFTC, not state gambling regulators. However, that position contradicts what Kalshi argued in a separate federal case against CFTC over political event contracts.

In this case, Kalshi argued that outcomes of sporting events have no real economic significance. They serve only for amusement and do not qualify as “excluded commodities” under the Commodity Exchange Act (CEA).

Under CEA, to be an “excluded commodity”, an event’s outcome must be beyond the parties’ control and “associated with a financial, economic, or commercial consequence.” Previously, Kalshi has even argued that contracts involving games are not something the platform would want to list, as they don’t have any economic value.

Now, Kalshi claims its sports event contracts qualify as “event contracts” under CEA. The platform claims that sporting events do have financial implications, such as increased TV viewership and advertising revenue.

As Wallach points out in another X post, a significant flaw in that argument is that the financial consequences related to advertising or broadcasting do not mean the event’s outcome is economically significant. A key question is whether the result of the sports event has financial or commercial consequences.

Kalshi’s prior narrow interpretation of “gaming” conflicts with its current broad claims about economic consequences, creating a critical legal inconsistency.

Court Questions CFTC’s Exclusive Jurisdiction Over States

A potentially key question raised by Judge Abelson is what the language of CEA intends. The judge questioned if the “exclusive jurisdiction” language in Section 2(a)(1)(A) means that CFTC jurisdiction is “exclusive” only regarding federal agencies, and not state agencies (including MLGCC).

Abelson also highlights the phrase “except as hereinabove provided” in Section 2(a)(1)(a), which he interprets as “unless otherwise stated.”

He further questioned whether the following savings clause indicates that Congress did not intend to override or restrict state laws. The clause states that nothing in the law should override regulatory authority granted to federal and state agencies.

The legislative history indicates that in 2010, Senator Lincoln expressed concerns that the CFTC should prevent contracts contrary to the public interest. He warned that sports event contracts had no commercial value and could only be tools for gambling purposes.

Kalshi acknowledged that Lincoln’s statements likely indicated Congress’s intent at the time. However, it argued that the status of sports betting “has changed dramatically since 2010.” Today, it is lawful in most states, including Maryland. Kalshi continued to say that the country’s opinion on whether sports betting is contrary to the public interest has changed since 2010.

In response, Ableson pointed out that the likely reason is that sportsbooks are heavily regulated. They must also ensure that people don’t get addicted. The court emphasized that state gambling laws are carefully created with strict regulatory oversight.

Could Judicial Estoppel Apply?

The court points out that Kalshi previously stated that sports event contracts do not qualify as “swaps” (commodities) when it suited their position in the CFTC case. However, now it says they are.

If the court determines that Kalshi is attempting to change its position to gain an unfair advantage, it may apply the doctrine of judicial estoppel. That is a legal principle that prevents a party from contradicting earlier statements in court, ensuring fairness and consistency.

Therefore, if the court applies the judicial estoppel, Kalshi won’t be able to claim that the contracts are permitted under federal law, as they’ve already argued they aren’t in the CFTC case.

That could be a pivotal development as it could seriously weaken Kalshi’s defense that federal law protects it against state gambling laws. As a result, Maryland (and other states) could receive more power to shut down or regulate Kalshi’s sports-event betting contracts.

Potential Ripple Effects of a Favorable Ruling for Kalshi

The results of this case could have significant implications for Kalshi elsewhere. The platform has already secured some legal victories. Federal courts in New Jersey and Nevada have granted it temporary injunctions against the state’s gambling regulators. These injunctions could become permanent if there is a favorable outcome in the Maryland case.

If Abelson rules that Kalshi’s sports events are explicitly under CFTC regulations, it would represent a significant victory for the platform.
It would exempt Kalshi from state-level gambling regulations and solidify its regulatory framework at the federal level.

Furthermore, upcoming leadership changes at the CFTC could further help Kalshi.

Donald Trump’s nominee for CFTC Chairperson, Brian D. Quintentz, currently sits on the Kalshi board. If elected, he has indicated that he will resign from Kalshi. He will also recuse himself from any matters surrounding the company for a year.

While Quintentz has recused himself, his familiarity with the event predictions could influence the agency’s approach to oversight of Kalshi.

Notably, the CFTC has so far remained inactive in the legal battles between Kalshi and state regulators. Despite requests to intervene from some states, including Tennessee and Arizona, the agency has yet to act.

The post Maryland Federal Court Challenges Kalshi’s Inconsistent Sports Events Contract Claims appeared first on CasinoBeats.

He recently revealed on the social media site X (formerly Twitter) that he purchased $98.76 worth of contracts on prediction market Kalshi to win the state’s gubernatorial race in 2026. Langford, the Executive Director of the California First PAC, also requested his followers to place bets of their own as a sign of support.

Reflecting the steep odds Langford faces in the deep-blue state, Kalshi showed a 6% chance of him winning at the time of his bet. It also revealed a potential payout of $405, equaling $306.32 in profit.

Kalshi Continues to Face Scrutiny from State and Federal Regulators

Kalshi, an online platform where users in all 50 U.S. states can buy and sell contracts on the outcome of future events, began allowing election betting in the U.S. in October 2024. 

The timing was significant, as it came weeks before the U.S. presidential election. It also introduced markets for major sporting events, such as the Super Bowl and March Madness. The company now offers markets on single matches, which has sparked major debate across the United States. 

Despite being regulated by the Commodity Futures Trading Commission (CFTC), Kalshi and other prediction markets such as Robinhood and Crypto.com have faced intense scrutiny from both state and federal regulators. 

Seven states — Arizona, New Jersey, Nevada, Maryland, Montana, Ohio, and Illinois — have issued cease-and-desist orders against the markets, claiming they circumvent rules, regulations, and tax policies.

Kalshi CEO Tarek Mansour, meanwhile, has long touted such markets as “quintessential truth machines,” claiming their growth is representative of “how important they have become to the American people.”

Kalshi scored a significant victory last month when the CFTC withdrew its appeal against the legality of election markets.

“Election markets are here to stay,” Mansour said on X. “Prediction markets have been banned, censored, limited, and pushed out for decades. This win solidifies their right to exist and thrive.”

Potential Governor’s Wager Ignites Debate About Ethics

While Langford’s bet may be technically legal, it has raised questions about market integrity and the role of prediction markets in future political elections.

Shortly after, Kalshi acknowledged the bet in a statement: “We are aware of the recently publicized circumstance regarding a candidate trading on a market regarding their candidacy, and our compliance and surveillance teams are acting accordingly.”

“As required of all CFTC-regulated exchanges, Kalshi investigates and, as appropriate, adjudicates all potential violations of its Rules,” it continued. 

The company concluded: “Kalshi does not give public comment on the status of ongoing investigations. The outcome of such an investigation, or any pursuant notice of charges or discipline, may become public via exchange notice.”

Langford Remains a Longshot to Win Governor Despite Wager

Langford unquestionably faces an uphill battle to victory in California.

As of Saturday night, Democrat Toni Atkins led Kalshi’s prediction market with odds of 15% to become California’s next governor. Close behind were fellow Democrats Eleni Kounalakis (14%) and Antonio Villaraigosa (12%), followed by Xavier Becerra (7%) and Katie Porter (6%). 

At 6%, Langford did have the highest odds among Republican candidates. 

The post Republican Kyle Langford Places Wager on His Own Election Victory, Sparks Ethics Debate appeared first on CasinoBeats.

The pledge is part of Quinentz’s ethics agreement, which he submitted to the US Office of Government Ethics on May 21 as part of the nomination process. The next step in the process is a Senate confirmation hearing, which has not yet been scheduled.

Quintenz served as the Chair of the CFTC between 2017 and 2021 during President Trump’s first term. Unsurprisingly, the president has nominated him again.

If confirmed as CFTC Chair, he will lead a federal agency with policy initiatives directly tied to his current interests, including event contracts (Kalshi) and digital assets (AH Capital Management).

Quintenz to Resign from Current Roles and Divest Stock

Quintenz has pledged to resign from all positions that could pose a conflict of interest, including KalshiEx (Kalshi), AH Capital Management (commonly known as Andreessen Horowitz), and Next Level Derivatives.

In the letter, the nominee states that he has already resigned from the Crypto Council for Innovation and will also resign from Remember Those in Prison, both nonprofit entities.

Quintentz will also divest all equity holdings, carried interest, and stock options within 90 days of confirmation. He adds that where applicable, he may seek a Certificate of Divestiture.

He also commits to recusing himself from matters involving those entities until divestiture is complete. 

After completion, the CFTC Chair nominee will recuse himself on matters involving former employers, including Kalshi, for one year. In the AH Capital case, that period will be two years.

Furthermore, Quintenz will remain a trustee without compensation of family trusts, but will recuse himself from decisions that could raise conflicts.

He will also undergo ethics training within 15 days of taking office and certify compliance within 90 days.

Quintentz’ Recusal Could Benefit Kalshi

The CFTC Chair nominee’s ethics disclosure should alleviate concerns about potential conflicts of interest.

However, his recusal for one year from matters related to Kalshi could also help the prediction market platform. Kalshi lets users bet on various event outcomes, such as whether egg prices will rise or how much it will rain in New York next month.

However, the platform has been involved in legal conflicts over allowing betting on political matters, such as election results. It also provides sports-related events, which have raised questions about whether that constitutes unregulated sports betting.

In July 2023, Kalshi filed a request with the CFTC to offer election market predictions. The agency, which regulates the US derivatives market, including futures, swaps, and options, denied that request. What followed was a nearly two-year legal battle.

In September 2024, the District Court of Columbia sided with Kalshi, and an appellate court denied CFTC’s appeal. However, it allowed the relitigation if the agency found new arguments. Coincidentally or not, after Pres. Trump came into office and nominated Quintentz, CFTC dropped its appeal, clearing the way for Kalshi to offer political contracts.

Kalshi has been involved in legal battles with several states, such as Maryland, regarding sports predictions. However, as Kalshi’s business falls under the CFTC’s jurisdiction, the agency has the authority to decide on the matter. 

So far, the agency hasn’t acted, even after urging from Tennessee. That has enabled Kalshi to grow the segment, which now accounts for the majority of its business.

A confirmation for Quintentz and his recusal for a year could mean that the agency’s inaction will likely continue. For context, all current CFTC commissioners have either left or are planning to resign, paving the way for Kalshi to continue offering sports contracts without regulatory oversight.

The post Trump’s CFTC Nomination Quintenz to Resign From Kalshi, Recuse Himself on Related Matters appeared first on CasinoBeats.

Financial news service Bloomberg, which last week broke news of the partnership, has since deleted its original story on the deal.

Social media posts on X (formerly Twitter) and LinkedIn by Kalshi CEO Tarek Mansour, touting the announcement, have also been scrubbed.

“I could not be more excited to announce Kalshi’s upcoming partnership with xAI,” Mansour said in a now-deleted post. “Together, we’ll shape the future of news and information.”

Hours later, amid much confusion, Bloomberg posted a retraction, reporting that the agreement between Kalshi and xAI “had not been mutually confirmed.”

Kalshi and Musk’s xAI Share Political Ties

It remains unclear if a deal was ever actually agreed upon between Kalshi and xAI. Whatever the case, Mansour spelled out his vision for both sides, writing in a since-deleted post that “Together, we’ll shape the future of news and information.”

Mansour also shared his affinity for Musk, saying he has “inspired me at every step,” and explained that prediction markets, social media, and AI are deeply aligned in how they operate.

That Mansour and Musk both have ties within U.S. President Donald Trump’s inner circle only fueled speculation about the potential partnership.

In January, Kalshi took on Donald Trump Jr. as a strategic advisor.

Meanwhile, Trump nominated Kalshi board member Brian Quintenz to head the Commodity Futures Trading Commission (CFTC), the federal agency that oversees prediction markets such as Kalshi.

As for Musk, he was appointed by Trump to head the newly formed Department of Government Efficiency (DOGE), a program focused on cutting government spending.

Prediction Markets Continue to Attract Regulatory Pressure

Whereas sports betting is legally operative in only 38 states and Washington, D.C., prediction markets like Kalshi, Robinhood and Crypto.com are accessible throughout the country.  

Because they are not considered sports betting, these platforms lack specific safeguards and do not pay state taxes on betting. This has motivated gaming regulators to shut them down, claiming they circumvent rules, regulations, and tax policies.

This week, Arizona became the seventh state to issue a cease-and-desist letter to Kalshi, joining New Jersey, Nevada, Maryland, Montana, Ohio, and Illinois.

“The Department recognizes Kalshi’s attempt to legitimize its conduct by labeling it as an “innovation” regulated by the Commodity Futures Trading Commission,” Douglas Jensen, Chief Law Enforcement Officer for the Arizona Department of Gaming (ADG), wrote in a letter addressed to Mansour on Wednesday, according to multiple reports. 

“In fact, there is no meaningful difference between buying one of your offered contracts and placing a bet with any other sportsbook,” he continued. 

He concluded: “Given the lack of licensure and compliance with Arizona statutes and regulations related to event wagering, online gambling as operated by Kalshi in Arizona, whether through a website … the Kalshi mobile applications, or otherwise, is illegal.”

The ADG sent similar letters to Robinhood and Crypto.com.

Kalshi scored a victory earlier this month when the CFTC moved to drop its appeal of a federal judge’s decision allowing the platform to offer election-based event contracts in the United States.  

The post Kalshi and Musk’s xAI Partnership Announcement Retracted appeared first on CasinoBeats.