Kalshi chief executive Tarek Mansour said Wednesday that mounting legal challenges could push U.S. prediction markets offshore, warning that the industry's future in the country hinges on how courts and regulators resolve a dispute over who oversees event contracts. Speaking at DC Fintech Week near Washington, Mansour argued that federal oversight offers a clear path for event trading, while several states maintain that contracts tied to sports results fall under their gambling laws. His remarks underscored a widening conflict between federal derivatives oversight and state gambling authority — a fight that will determine whether event trading operates under a single federal framework or a state-by-state patchwork of gambling rules.

State Challenges to Sports Contracts

Mansour defended Kalshi's treatment of event contracts — derivatives whose payouts depend on whether specific real-world outcomes occur — as financial products, saying the outcomes of sporting events carry real economic consequences. He argued that the Commodity Exchange Act gives federal regulators authority over markets that extend beyond traditional commodities.

State officials see the matter differently, contending that contracts tied to game results amount to sports betting. They have taken Kalshi and other operators to court in an effort to apply state gambling rules to the products. The NFL has backed New Jersey's Supreme Court appeal, with the league raising concerns about consumer protections and game integrity.

Federal appeals courts have reached divergent conclusions. One ruling supported Kalshi's federal oversight argument, while two others favored state authority. The justices have not agreed to hear New Jersey's case, and Kalshi must respond to the petition by November 9, the next procedural step before the court decides whether to take it up.

CFTC Seeks Stronger Federal Authority

Kalshi and the Commodity Futures Trading Commission argue that federal law gives Washington — not individual states — authority over event contracts, a position Mansour framed in stark terms.

"It's a choice of whether prediction markets exist in the U.S. or whether they go offshore," Mansour said.

On October 9, the agency proposed treating prediction market event contracts as swaps, a category that falls under federal derivatives law. The classification would consolidate oversight of the products under the federal framework Kalshi is defending, rather than the state gambling regimes that several states are trying to enforce. A separate interim rule excludes casino-style games from the swap definition, drawing a line between regulated contracts and gambling.

The proposed change covers contracts linked to sports, politics, weather and culture, and it remains subject to the rulemaking process. With the Supreme Court petition still pending, companies and state regulators continue to contest the current legal framework while the jurisdictional question remains unresolved. How quickly the rulemaking advances, and whether the justices eventually take up the case, are the developments most likely to clarify where oversight of the sector ultimately sits.

Kalshi Addresses Trading Volume Questions

More firms are seeking access to the U.S. market even as these regulatory questions remain unresolved. Last week, Blockchain.com applied for two CFTC licenses to offer U.S. prediction markets and crypto derivatives, a sign of growing commercial interest in the sector.

Mansour also faced questions about repeated transaction sizes observed in Kalshi's Bitcoin and Ether perpetual-futures markets. He rejected claims that those patterns showed inflated volume, explaining that market makers place fixed-size orders, which can produce repeated trade amounts. He criticized speculation about the figures and said trading activity can be difficult to interpret without an understanding of how orders work.