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1. Kalshi state oversight and the offshore warning
Kalshi chief executive Tarek Mansour said on Wednesday, October 14, that handing oversight of U.S. prediction markets to individual states would not merely change who regulates the industry but would drive it out of the country. Speaking at DC Fintech Week near Washington, he said he feels “pretty good” about Kalshi's legal position despite recent court setbacks.
The remarks come while one of the most closely watched jurisdictional disputes in American finance is still unresolved. Kalshi operates an exchange where users trade event contracts, which pay out depending on whether a specified real-world outcome occurs. A growing share of that activity concerns sporting events, and that is precisely where state officials have chosen to object.
Mansour's central argument was that the debate is often framed incorrectly. In his telling, the real decision facing courts and policymakers is not a contest between state and federal authority. It is a choice between a prediction market industry that operates under federal supervision inside the United States and one that relocates beyond its borders.
2. How does Mansour describe Kalshi's legal standing?
Mansour described the company's overall position in confident terms, saying at the event, “We feel pretty good about where we stand overall.” That assessment is notable because several federal courts have already issued rulings that cut against the position he holds.
He also pushed back on a line of argument that treats sports as a lesser category of event contract. Sports wagering-style contracts have become the fastest-growing part of the market, and critics have sometimes suggested they carry little genuine economic significance. Mansour rejected that view directly, calling the notion that sports lacks economic consequence “ludicrous.”
The distinction is not merely rhetorical. Whether a contract is a financial instrument with economic purpose, or a bet dressed up as a trade, bears on which body of law applies to it. If the contracts are federally regulated financial products, they fall under the oversight of the federal commodities regulator. If they are gambling, state gaming authorities have a plausible claim to control them.
3. Why are states taking prediction market firms to court?
Several states have filed suits against Kalshi and other prediction market operators. Their complaint is that the platforms offer illegal sports wagering and do so without the licenses that state gambling regulators require of sportsbooks and casinos. For states that have built extensive licensing and tax frameworks around betting, an unlicensed competitor operating nationwide is a direct challenge.
Kalshi sees the matter differently. The company, together with the Commodity Futures Trading Commission, which is the federal regulator of its exchange, argues that the CFTC alone should supervise these contracts. On that reading, federal law reserves the field, and state gambling statutes cannot be applied to an exchange the federal agency oversees.
The two sides therefore disagree not just on facts but on a basic question of legal categories. Is an event contract a swap or a derivative, subject to the federal regulatory regime for those products, or is it a wager under state law? Every lawsuit in this fight turns on how a judge answers that question.
4. Where do the federal appeals courts stand?
The dispute has now reached multiple federal appellate courts, and they have not agreed with one another. One significant ruling has gone in Kalshi's favor, while two others have backed the states. A further appeals court decision, issued in late September, held that sports contracts offered by Kalshi are subject to state regulation.
When circuit courts split on the same legal question, the usual path is review by the U.S. Supreme Court, and that process has begun. New Jersey has asked the justices to take up the case. Prominent outside organizations, among them the National Football League, have also made their views known to the high court, a sign of how many parties believe the outcome will affect them.
Mansour acknowledged that a couple of federal courts have ruled against his view, yet he continued to express optimism. His reasoning, as laid out at the event, rests less on any single ruling than on his reading of how the underlying law is structured and on what a loss would mean in practice.
The split matters because prediction markets are national products. An exchange that is lawful to use in one part of the country but treated as illegal gambling in another faces uncertainty over customers, compliance costs and enforcement exposure. That practical burden is part of why both the company and its opponents are pressing for a definitive answer from the highest court rather than waiting for the lower courts to converge on their own.
5. What would a loss mean for prediction markets in the United States?
A loss would, in Mansour's words, force a decision about location. “It's a choice of whether prediction markets exist in the U.S. or whether they go offshore,” he said. The point is that if every state could impose its own rules, a nationwide platform would face a patchwork that it might find unworkable.
Moving offshore carries consequences beyond where a company files its paperwork. A platform based outside the country would sit beyond the reach of U.S. regulators, which would reduce oversight of how markets are run and weaken the protections available to American users. It would also remove the revenue and activity that a regulated domestic industry generates.
That is the heart of the warning. Mansour is not claiming that regulation can be avoided; he is arguing that the particular regulatory route preferred by states could undermine the very supervision that regulators say they want. Whether courts find that argument persuasive is a separate matter, and it has not yet been settled.
6. Why does the Commodity Exchange Act matter to Kalshi?
Mansour explained that he has thought about Kalshi's regulatory home since the company's earliest days. He said the business “really elegantly fit under definitions of commodity,” which is the framework that supports federal oversight of its exchange. The Commodity Exchange Act is the law that governs derivatives trading in the United States, and the CFTC enforces it.
He praised that law warmly, calling it a “truly beautiful” piece of legislation. Its design, he said, allowed markets to broaden over time, from agricultural futures to energy products such as oil and to metals, and later to less tangible financial instruments such as swaps. In that sequence he sees event contracts as a natural next step rather than a departure from the law's purpose.
This historical argument is the backbone of Kalshi's case. If the statute was written broadly enough to accommodate each earlier expansion, the company contends, it is broad enough to cover contracts tied to the outcome of events. State officials, by contrast, tend to focus on the nature of the underlying event and argue that a game result is a gambling matter whatever label is attached.
7. How did Mansour respond to questions about trading volume?
Mansour also addressed criticism of Kalshi's trading figures, specifically claims that volume in bitcoin and ether perpetual-futures markets on the platform was inflated. Observers had pointed to trades of identical size recurring so often that they made up a large share of total volume, and online commentators drew skeptical conclusions from the pattern.
His explanation was that the repeated trade sizes come from market makers placing fixed-size orders, a practice he had already described at the Washington event. Market makers are firms that quote prices on both sides of a market to keep it liquid, and standardized order sizes are a common feature of how they operate.
He dismissed the online reaction, saying there is “a lot of crazy” on X, the social platform formerly known as Twitter, and rejecting the claims of inflated volume as “none of it.” More broadly, he said the episode showed “how much people misunderstand markets,” adding that markets are “just complicated” and “not easy to understand.”
8. What is the CFTC doing about event contracts?
The federal regulator has not stood aside while the courts deliberate. Over the past week the CFTC issued one rule and proposed another, and both are designed to classify event contracts as swaps. Under that classification, the agency rather than state gambling regulators would be the body policing them.
For Kalshi, this regulatory activity reinforces the federal argument at the center of its litigation. An agency that publicly asserts authority over event contracts, and moves to codify it in rulemaking, strengthens the case that Congress intended a federal framework for them.
The rule and the proposal are not a substitute for a judicial decision, however. Courts interpret statutes independently, and an agency's classification does not automatically bind a judge deciding whether state law can apply. That tension between regulatory initiative and judicial review is one reason the final outcome remains uncertain.
9. What happens next in the prediction market fight?
The most consequential next step is the Supreme Court's response to New Jersey's request. If the justices agree to hear the case, they could resolve the split among the appeals courts and set a national rule. If they decline, the conflicting appellate rulings would continue to govern in their own regions, leaving operators with different legal conditions depending on location.
Alongside that, the CFTC's pending rulemaking will continue to shape the debate, and state suits against Kalshi and other operators are still moving through the courts. No date has been given for a final resolution.
For now, Mansour's message is simple. He believes the outcome will be decided in his favor, and he warns that the alternative would not hand control to the states in any lasting way but would send the industry beyond the reach of American regulators altogether.