Kalshi CEO Tarek Mansour warned that if individual states take over enforcement against prediction markets regulated by the Commodity Futures Trading Commission, trading would move outside the United States to platforms that face no U.S. consumer safeguards. His comments came as federal appeals courts have issued conflicting rulings on whether the CFTC's authority over event contracts preempts state gambling statutes. The legal uncertainty affects sport-focused event contracts and has drawn in state regulators, the National Football League, and other exchanges.
The preemption dispute in federal court
Kalshi operates as a designated contract market under the CFTC, holding a federal exchange license. The company argues that this federal oversight preempts state gambling laws and that sports outcomes carry real economic effects. At a DC Fintech Week event near Washington, CoinDesk reported, Mansour called the idea that sports have no economic consequence "ludicrous." State officials counter that contracts paying out on game results are sports betting and should be governed by state gambling authority. Federal appeals courts have split: the Third Circuit sided with Kalshi in a New Jersey case, while the Ninth and Sixth Circuits held that states may enforce their gambling rules, according to Crypto Briefing. New Jersey has asked the U.S. Supreme Court to review the matter, and the justices have not yet agreed to hear it.
State enforcement actions and court orders
By late August 2026, at least four states—Nevada, Massachusetts, Michigan, and Washington—had obtained court orders restricting Kalshi's operations, according to Crypto Briefing. Nevada, Ohio, and Tennessee have been cleared to bring enforcement actions against Kalshi's contracts. The company is litigating in roughly 20 states, with Coinbase joining some of those challenges. The National Football League has supported New Jersey's Supreme Court appeal, citing concerns about consumer protection and game integrity. Kalshi must respond to the high court petition by November 9, CoinCentral reported.
The offshore warning and consumer protections
Mansour has made the offshore argument directly to lawmakers. At a Texas Senate hearing in September 2026, Kalshi's legal counsel Robert DeNault said bettors would not stop betting if regulated prediction markets were unavailable; instead, they would move to unregulated offshore operations that offer none of the consumer protections Kalshi says it provides. In a September 24 PBS interview, Mansour pointed to contracts Kalshi has chosen not to list, including wars, assassinations, death, insider trading, and members of Congress, and said the company is willing to accept additional regulation if it is imposed at the federal level. He framed the choice as whether prediction markets remain in the U.S. or move offshore.
CFTC's proposed swap classification
On October 9, the Commodity Futures Trading Commission proposed treating event contracts tied to sports, politics, weather, and culture as swaps, placing them under federal derivatives law. A separate interim rule would exclude casino-style games from the swap definition. The proposal remains subject to the rulemaking process. The CFTC has moved quickly to strengthen its authority during the court fight, while CoinCentral noted that Blockchain.com applied last week for two CFTC licenses to offer U.S. prediction markets and crypto derivatives.
Sports revenue and market speculation questions
Sports contracts have driven much of Kalshi's business. In 2025, sports outcomes accounted for about 95% of company revenue; by mid-2026, that share had dropped to roughly two-thirds, which Crypto Briefing attributed to the shifting legal environment. The decline suggests that state court orders are affecting the revenue mix. Mansour also pushed back on social media speculation that Kalshi's bitcoin and ether perpetual-futures volume was inflated. He said recurring trade sizes came from fixed-size orders placed by market makers, not fabricated activity. He added that markets are complex and often misunderstood, according to CoinDesk.
