Sports event contracts are not gambling, Kalshi CEO says

Catch up quick: Kalshi last year won the right to offer election event contracts and is now quickly expanding its sports event contracts in all 50 states, including the 11 states where sports betting is still illegal.

• That now includes certain single-game event contracts, such as games in this week's NBA's play-in tournament, plus "futures" bets like the winner of the 2026 Super Bowl.
• Kalshi also allows users to invest in a wide range of other contracts, like weather outcomes, stock market performance, Federal Reserve decisions, entertainment award winners and product launches.

The big picture: Kalshi CEO Tarek Mansour told Axios in an interview that the company should not be treated like sportsbooks, which are regulated on a state-by-state basis.

• "I just don't really know what this has to do with gambling," he said at an office in Washington. "If we are gambling, then I think you're basically calling the entire financial market gambling."
• "In our markets, you're trading in an open financial marketplace. You're trading against other people," he added." If you go to a traditional model, you're betting against a sportsbook. They're setting the odds and they make money if you're losing money."

Follow the money: Kalshi reported more than $86 million in trading on the Masters golf tournament last weekend after fielding hundreds of millions on the NCAA men's basketball tournament in the previous weeks.

• "The growth has been astronomical," Mansour said. "It's been great to see."

The other side: The American Gaming Association, a group that represents traditional gambling interests, has requested permission to attend the CFTC roundtable to discuss how "these sports events contracts are problematic for a variety of public policy reasons," Sportico reported.

• "Sports betting industry insiders, who have not been invited to the roundtable, want to join the meeting to make the case that federally regulated sports futures trading too closely mimics sports gambling, which is overseen by state regulators," per Sportico.
• Multiple states, including the gambling haven of Nevada, have also sent cease-and-desist letters to Kalshi over its sports event contracts.
• But a federal judge last week issued a preliminary injunction rejecting Nevada's attempt to block Kalshi from offering these contracts, saying that "at this point in time, federal law allows Kalshi to offer both sports and election-based event contracts on its exchange."

The big question: Where will the CFTC land?

• The CFTC did not respond to a request for comment.
• "We have gotten largely silence from the CFTC" so far, Dustin Gouker, a gambling industry consultant, wrote in his newsletter Closing Line Consulting. "But that silence feels untenable moving forward."

• Acting chair Caroline Pham sent welcoming signals in February when she assailed the agency's "past hostility to innovation" in this area and called prediction markets "an important new frontier...to assess sentiment to determine probabilities that can bring truth to the Information Age."
• President Trump — whose son, Donald Trump Jr., recently became an adviser to Kalshi — has since nominated Kalshi board member Brian Quintenz as permanent chair of the CFTC.

Our thought bubble, from Axios Crypto author Brady Dale: If the argument about not earning fees on losses holds up, that should be great for the giant of prediction markets, the blockchain-based and crypto-powered Polymarket, which charges no fees.

• Polymarket has some legal question marks hanging over it, but it's still doing hundreds of millions of dollars in volume each month.
• The Trump administration has gone out of its way to turn the page on crypto in Washington. With a blockchain-based application leading this sector it seems more likely to be smiled on by the White House.

What to watch: If sports event contracts get the green light from the CFTC, sportsbooks may try to get in on the action.

• DraftKings has recently registered a potential business called DraftKings Predict with the National Futures Association, a self-regulatory group for the derivatives industry, according to Gouker.
• "We're seeing a lot of demand from some of the sports operators to get financial broker licenses and integrate into Kalshi to offer this kind of sports financial product," Mansour noted, saying sportbooks would be "offering our markets to their customers as a financial broker."