Kalshi triggers billion-dollar clash with US gaming industry

Kalshi has fueled a billion-dollar dispute over sports betting regulation as trading activity on its platforms continues to surge.

According to a report from Semafor, a coalition that includes the Indian Gaming Association, the American Gaming Association, and labor organizations has urged the US Senate to add language to the CLARITY Act explicitly preventing sports and casino-style event contracts from being offered through prediction market platforms.

In a letter to lawmakers, the groups argued that sports betting should remain outside the jurisdiction of the Commodity Futures Trading Commission and continue to be governed by existing state and tribal regulatory systems.

The coalition stated that prediction markets have enabled what it described as the largest expansion of gambling in US history over the last 18 months without direct legislative approval.

The dispute arises as Kalshi continues expanding beyond its original prediction market business.

Earlier this week, the company disclosed that its perpetual futures products generated more than $5.5 billion in trading volume within two weeks of launch. The platform currently offers 11 crypto-linked perpetual futures contracts and is discussing additional products with regulators.

Gaming groups challenge federal oversight of sports contracts

Pressure from gaming organizations has increasingly centered on the CFTC’s position that prediction markets fall under federal commodities regulation. Under Chair Michael Selig, the agency has supported platforms such as Kalshi and Polymarket in legal disputes involving state gaming regulators.

In their letter, the organizations argued that the CFTC was established to oversee commodities and derivatives markets rather than sports wagering. They contended that the agency lacks the operational framework and expertise required to regulate nationwide sports betting, particularly in areas where state and tribal authorities already maintain oversight.

Financial concerns have also become part of the debate. Data cited by the American Gaming Association estimates that state gaming authorities have lost roughly $1.08 billion in tax revenue since prediction market platforms began offering sports-related event contracts.

Meanwhile, lawmakers continue negotiating the final shape of the CLARITY Act, legislation designed to transfer portions of digital asset regulatory authority from the Securities and Exchange Commission to the CFTC. Although the bill passed the House of Representatives in July 2025, discussions over stablecoin yield products, ethics provisions, and tokenized equities have delayed final approval.

Kalshi expands crypto derivatives despite legal uncertainty

While the political fight intensifies, Kalshi has continued adding products tied to digital assets. Following regulatory approval of its BTCPERP contract on May 29, the company launched CFTC-approved Bitcoin perpetual futures in the United States and later expanded into XRP and Solana contracts.

The contracts allow traders to maintain positions without expiration dates while using funding payments designed to keep prices aligned with underlying spot markets. Although the structure can support continuous trading activity, leverage may amplify losses during periods of sharp market volatility.

Additional filings involving Dogecoin, Shiba Inu, Stellar, Hedera, and Hyperliquid’s HYPE token have also advanced through regulatory review processes, indicating that Kalshi’s crypto derivatives lineup may continue to grow.

Legal observers cited in the Semafor report believe the conflict between federal and state regulators could ultimately reach the U.S. Supreme Court.

The possibility stems from competing interpretations of the court’s 2018 Murphy v. National Collegiate Athletic Association ruling, which gave states authority over sports gambling, while Kalshi, Polymarket, and the CFTC maintain that event contracts offered on prediction market platforms qualify as swaps subject to federal oversight.