Kalshi CEO: State Control Will Push Prediction Markets Offshore

Kalshi CEO Tarek Mansour stated that if U.S. courts side with states claiming regulation of such companies as gambling businesses, prediction markets will be forced to move abroad. He said this on Wednesday at the DC Fintech Week event near Washington.

"We feel pretty good overall," Mansour said. He dismissed arguments that sports betting—the fastest-growing segment of event contracts—does not have significant economic consequences justifying their status as federally regulated financial contracts. "The notion that sports have no economic consequences is absurd," he said.

An increasing number of states are challenging Kalshi and other prediction market companies in courts, accusing them of illegal sports betting that should be regulated by state authorities. Kalshi and its federal regulator—the Commodity Futures Trading Commission (CFTC)—argue that the federal agency is the sole supervisory body for prediction markets.

The dispute has reached several federal appellate courts, where decisions have diverged: one major ruling in favor of Kalshi, two in favor of the states. As a result, New Jersey has asked the U.S. Supreme Court to review the case, and influential groups, including the National Football League, have submitted their opinions to the high court.

"It's not a choice between a state market and a federal market. It's a choice between whether prediction markets exist in the U.S. or move abroad," Mansour said. He claims to have considered Kalshi's regulatory status from the beginning, and "it really neatly fit into the definitions of a commodity." According to him, the Commodity Exchange Act is "a truly beautiful statute," allowing the transition from agricultural futures to oil and metals, and then to less tangible financial products like swaps.

Mansour also responded to allegations of inflated trading volumes on BTC and ETH perpetuals on his platform. He said, "There's a lot of craziness on X, formerly Twitter." Questions concerned recurring trade sizes that made up a significant portion of Kalshi's volume. Mansour pointed to fixed orders from market makers: "Twitter erupted: 'Oh my God, a spike, surely it's volume manipulation.' Nothing of the sort. Maybe the main thing here is how much people don't understand markets. They're just complex. They're not easy to grasp."

The CFTC is actively strengthening its authority in the prediction markets sector. Last week, it issued one rule and proposed another to include event contracts in the definition of swaps, which are clearly regulated by the agency rather than state gambling regulators.