Kalshi, the CFTC-regulated predictions market, has stayed at the center of the debate about whether it falls within the remit of gambling law. The new justification involves semantics, adopting the stance that terms like "bet" or "odds" in advertising don't label its platform a gambling company.
Key Takeaways
- Kalshi is defending the use of betting language, claiming peer-to-peer trading avoids gambling classification
- A coalition of 36 attorneys general argues Kalshi exploits regulatory loopholes for unlicensed online gambling
- A $185 million Series C round boosts Kalshi’s valuation to $2 billion amid market expansion
During the convention of the National Council of Gaming State Legislators, Josh Sterling, attorney at law of Milbank, representing Kalshi, argued that the website falls outside the scope of sports gambling because it does not provide odds but instead functions as a peer-to-peer exchange. This statement has invited fresh scrutiny of Kalshi's marketing, which frequently uses betting terms.
Without a gambling license, Kalshi permits trading on sports outcomes and other events in all 50 states. It has repeatedly asserted that the Commodity Futures Trading Commission oversees its operations as a designated contract market.
However, critics argue that Kalshi's interface mimics that of a sportsbook. The company has publicly used American odds formats and once promoted its services with Google ads, stating "Bet on NBA legally," a campaign that has since been removed.
Despite Sterling's clarification that Kalshi merely reflects market sentiment, opponents maintain that its marketing creates a conundrum by blurring the lines between prediction markets and traditional gambling products.
Attorneys general coalition opposes Kalshi's legal standing
A coalition of 36 state attorneys general, led by Ohio Attorney General Dave Yost, has filed an amicus brief challenging Kalshi's legal status. The brief, submitted to the U.S. Court of Appeals for the Third Circuit, supports New Jersey's position in a lawsuit over Kalshi's mobile platform.
Yost highlighted the right of states to control gambling, warning that Kalshi's model can circumvent the established frameworks intended to safeguard consumers.
It even occurred in the face of a ruling in favor of Kalshi in a U.S. federal court in New Jersey in April 2025. In Kalshi's view, the entity benefits from the Commodity Exchange Act, and its activity falls within the CFTC's jurisdiction.
Nevertheless, the coalition brief warns that Kalshi's unrestricted operation would raise the risk inherent in online gambling. Citing the risk of problem gambling and loss of funds, the brief strongly emphasizes states' duty to continue to regulate.
Kalshi reaches $2 billion valuation during fundraising spree
Kalshi has succeeded in generating $185 million in Series C funding recently, catapulting the entity to a $2 billion valuation. Led by crypto-biased venture firm Paradigm, the funding round drew major players such as Sequoia Capital, Multicoin Capital, and Citadel Securities' Peng Zhao. The funding pits Kalshi directly in competition with rivals such as Polymarket, which recently closed a $200 million raise.
Kalshi will use the proceeds to upgrade the company's technology infrastructure and further integrate into retail trading platforms like Robinhood and Webull. The company is leveraging its regulatory status to grow across institutional and consumer-facing products.
