The point of a highly anticipated regulatory roundtable on Monday wasn't to debate whether federally regulated sports event contracts amount to sports betting.
Nevertheless, a perfect example of that issue (and the concerns it can raise) was provided by one roundtable participant, perhaps unintentionally.
- A CFTC-SEC roundtable focused on regulatory harmonization understandably sidestepped direct discussion of whether federally regulated event contracts amount to sports betting.
- Despite the official agenda, comments from industry leaders and rapid growth figures from platforms like Kalshi highlighted why state regulators remain deeply concerned.
- With prediction markets expanding nationally and attracting major players like FanDuel, state authorities fear lost revenue, diminished control, and legal battles over what they see as unlicensed sports betting.
Terry Duffy, chairman and chief executive officer of CME Group (“the world's leading derivatives marketplace”), told the room and his fellow panelists that he was in Las Vegas this past weekend with clients. And while on that trip, Duffy said, he was playing around on Kalshi, a federally regulated prediction market co-founded by Tarek Mansour, another panelist.
“Casino never saw me because I was on his platform the whole time, screwing around,” Duffy said to laughs.
Duffy dropped the line during a more than hour-long discussion about “how regulatory harmonization efforts could unlock economic value for platforms while continuing to protect investors,” so it was just one of many things said.
Furthermore, most of the discussion on Monday during the hours-long roundtable centered around what the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) convened everyone for, which was a joint roundtable “to discuss regulatory harmonization priorities between their agencies.”
Their agencies, not state gaming commissions or control boards or lotteries. So, understandably, the talk on Monday was more about the concerns and challenges and interests of federally regulated financial firms, not state-regulated sportsbooks.
Working Together is Working Better, Remarks of Acting Chairman Caroline D. Pham, SEC-CFTC Joint Roundtable on Regulatory Harmonization Efforts: https://t.co/WPL973CMLe
— CFTC (@CFTC) September 29, 2025
However, Duffy's quip could sum up what has state gambling regulators so worried about federally regulated prediction markets. It also helps explain why those state watchdogs (including Nevada's) are in court fighting prediction market operators.
To those state regulators, the sports event contracts offered by prediction markets are just sports betting by another name, competing with state-regulated casinos and sportsbooks for business. Those contracts allow prediction market users to bet "yes" or "no" on a wide variety of things, including who will win NFL games, in every U.S. state. This includes states with and without legalized sports wagering.
It’s a big issue looming over online sports betting in the U.S. And Monday’s roundtable (the participants of which included executives from prediction markets Kalshi and Polymarket) highlighted the growth of prediction markets and the growth that’s still to come. That could further worry state gambling regulators.
Mansour, CEO of the CFTC-regulated Kalshi, said they listed 124 prediction markets for trading in 2021. This year, he added, they are “probably” on track for around 2,000. Those contracts are "self-certified" by Kalshi, a process that allows the prediction market to offer products without a formal approval by the CFTC.
“We're trying to push 3,000 but we'll see,” Mansour said.
Mansour didn’t say how many of those markets will involve sports, but it’s safe to say many of them will. Kalshi has seen business boom with the start of the NFL, which is hugely popular with sports bettors.
The CEO of CME is a Kalshi user pic.twitter.com/YRCk9TNe5T
— Kalshi (@Kalshi) September 29, 2025
Kalshi has plenty of NFL-related event contracts. That makes them a concern (or a potential opportunity) for state-regulated entities like DraftKings and FanDuel, the latter of which has already dipped a toe into the prediction market space.
FanDuel dipped that toe via a partnership with CME Group, the chairman and CEO of which was also speaking on Monday’s panel.
“I just did the deal with FanDuel,” Duffy noted during a discussion about possible “innovation exemptions” for regulated entities.
“I'm all in on this stuff,” Duffy added, before warning “at the same time, you can exclude incumbent players in a different way.”
Yet the newer players seem to be establishing themselves. Their presence at the roundtable suggests as much.
Mansour said Kalshi oversees more than four million retail investors, in addition to a “large ecosystem” of market makers and financial brokers. He added that the company is facilitating around $40 billion of annualized trading volume “and becoming a meaningful player in the retail derivatives markets.”
One legal battle after another
Mansour also referenced Kalshi’s legal battles, namely its victorious one versus the CFTC regarding election-related event contracts. That allowed Kalshi to rise to prominence facilitating bets on last November's presidential election. The company has since expanded into de facto sports wagering.
“Thanks to this lawsuit, in some ways, prediction markets have gone, I would say, more legal, regulated mainstream in the U.S., and there's kind of a new category being established as a new financial instrument that we're very excited about,” Mansour said.
That instrument, again, are event contracts that allow someone to bet “yes” or “no” on certain event outcomes, sports included. And not everyone loves that fact, particularly state regulators and some of those they oversee.
“In addition to posing an unfair economic threat to sportsbook operators who have invested in pursuing licensure and regulatory compliance on a jurisdiction-by-jurisdiction basis, the introduction of a ‘national’ sports betting product severely undermines state regulatory authority while also jeopardizing state tax revenue,” an American Gaming Association official wrote in February to the CFTC, for another, aborted roundtable. “In certain states, the availability of these products also tramples on tribal sovereignty by violating gaming exclusivity agreements with those jurisdictions.”
Since that letter, some state gaming regulators have sought to shut down the trading of sports event contracts. Litigation is ongoing.
Again, though, Monday’s roundtable wasn’t to re-voice the kinds of concerns that state gaming regulators have. The discussion was more focused about what’s next, which could include different kinds of innovations being brought to market by prediction market operators. Those operators include Polymarket, which is technically offshore for the moment but tip-toeing back into the U.S. regulated system.
“When there's new technological innovation, when there's disruption, when there's paradigm shifts, the American way is to go and embrace that, as opposed to wait years for it to play out,” Polymarket CEO Shayne Coplan said at one point during Monday's CFTC-SEC panel.
Mansour said that one of the "pertinent issues" holding back innovation today is "legal uncertainty," something he hoped regulatory harmonization efforts could help.
"What American companies are left with is sort of waiting for regulatory clarity, where some of the innovation is pushed offshore, which is not ideal for America," he said.
