Kalshi fuels billion-dollar battle over US sports betting regulation

The alliance—including the American Gaming Association and the Indian Gaming Association—argues that sports wagering should remain firmly under the purview of state and tribal regulators. In a letter to lawmakers, the coalition contends that the Commodity Futures Trading Commission lacks the necessary expertise to oversee sports betting, characterizing the rise of prediction markets as the largest unregulated expansion of gambling in recent history. The American Gaming Association estimates that these platforms have already cost states $1.08 billion in lost tax revenue.

This tension persists as Kalshi rapidly diversifies its offerings. The platform recently reported over $5.5 billion in volume within two weeks of launching crypto perpetual futures. While the CFTC has historically shielded firms like Kalshi and Polymarket from state-level interference, the legislative fight over the CLARITY Act now threatens to strip that federal protection. Legal experts suggest the dispute may eventually reach the Supreme Court, pivoting on conflicting interpretations of the 2018 Murphy v. National Collegiate Athletic Association ruling regarding the limits of state authority versus federal oversight of financial swaps.