FEDERAL VS STATE REGULATION
State of play: Prediction Markets KALSH’S PASSAGE THROUGH THE COURT SYSTEM IN THE UNITED STATES PROVIDES MEANINGFUL INSIGHT INTO THE LAWS THAT APPLY TO SPORTS BETTING IN THE US AND TO THE US LEGAL PROCESS ITSELF AS DANIEL MCGINN REPORTS
based on the outcome of the US election. The CFTC attempted to block the contracts arguing that they were illegal and could undermine election integrity. Kalshi contested the ban and was successful in the DC District Court, and the federal government dropped its appeal of the District Court ruling following the administration change in 2025. The law around swaps and derivative trading and the functioning of the CFTC itself has its roots in early gambling law. At the turn of the 20th century, when futures trading started on commodities, there was an entire body of law that dealt with state differences. It said, for example, we will recognize that Chicago can trade commodities, but we’re not going to let it happen in Louisiana, because Louisiana views that as gambling. That situation persisted until the early 1970s when the CFTC was established. That created the conditions to allow futures trading on commodities to thrive
Introduction Kalshiex LLC (“Kalshi”)is an upstart in the world of US sports betting and its legal battles involve a relatively nuanced area of law, but its journey will have a critical bearing on industry players evaluating their US business strategy over the next several years. As this litigation progresses, possibly as far as the Supreme Court, B2B platforms need to be prepared to pivot based on court rulings. Kalshi is a US designated contract market registered with the Commodity Futures Trading Commission (CFTC). It has been operating since 2021 providing a platform for both retail and institutional customers to trade on future events including economic indicators, weather patterns, political and legislative outcomes. The company first came to wider public attention in 2024 when it started offering contracts
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IMGL MAGAZINE | SEPTEMBER 2025
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