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Kalshi is standing firm in its legal battle against five U.S. states over its sports-outcome markets, insisting it only answers to the Commodity Futures Trading Commission (CFTC). The company, which runs federally regulated prediction markets in all 50 states, has no plans to back down unless directed by the CFTC itself.
Founder Tarek Mansour confirmed in an interview with TechCrunch that cease-and-desist letters from Nevada, New Jersey, Ohio, Illinois, and Montana haven’t changed Kalshi’s plans. “We are literally like a financial exchange, but the underlying trading is events,” he said. “The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”
Several states claim Kalshi is operating illegal sports betting markets and should hold a gaming license. Kalshi disagrees. The company says it isn’t offering gambling but instead running a regulated financial platform with contracts based on public outcomes like sports scores and elections.
Mansour says larger industry forces are pressuring regulators. “The reason why states are sending us these cease-and-desists is because there are massive casino lobbyists not happy about this,” he said.
Kalshi has filed lawsuits against Nevada and New Jersey in an attempt to protect its right to offer these markets nationwide. The company argues that state laws do not apply to federally regulated exchanges. Mansour compared Kalshi’s setup to grain futures trading in Kansas—where federal oversight allows it despite conflicting state rules.
He added, “The state law doesn’t really apply when you’re a federally regulated exchange.”
Kalshi’s legal stance hinges on a belief that these contracts function like derivatives used in traditional financial markets. “We do not fall under that model,” Mansour said. “There hasn’t been a single financial derivative set up in the U.S. or otherwise that hasn’t been called gambling at the beginning. It’s consistently the same thing.”
The CFTC has not formally endorsed Kalshi’s approach to sports markets, but it also hasn’t told the company to stop. Earlier, the commission blocked Kalshi from running election markets, but federal judges sided with the platform, allowing it to offer contracts on political events such as the 2024 presidential race.
Kalshi expanded into sports earlier this year with contracts tied to Super Bowl LIX and March Madness. During the NCAA tournament’s first weekend, users traded over $200 million in contracts. Kalshi also offers these sports markets through Robinhood, which received its own cease-and-desist letters from regulators.
“It has an economic utility behind the speculative activity, and that’s what makes it a financial instrument and not a gambling instrument,” Mansour said.
Nevada was the first to act, accusing Kalshi of running unlicensed gaming. Mansour said the state’s gaming board posted the cease-and-desist publicly before Kalshi even received it. “(Kalshi) had to call four times to see if they were going to send it,” he added. “Legally, you cannot receive a cease-and-desist on Twitter.”
Kalshi was granted a short extension until mid-March before filing a lawsuit. The company claims the cease-and-desist order violates the Commodity Exchange Act, the same law that governs futures markets.