In January of 2025, Kalshi completely reversed the positions listed above by self-certifying event contracts directly related to the outcomes of sporting events. Kalshi and other prediction markets recognized enforcement weaknesses at the CFTC and have quickly exploited them. The first sport event contracts that CFTC inaction enabled were offered by DCMs in January 2025. There was approximately $1.3 million in volume related to Super Bowl LIX. Ten months later, in October of 2025, prediction markets reported more than $4 billion in monthly volume related to sport event contracts. Because CFTC regulations allow prediction markets to self-certify event contracts without pre- clearance from the agency, companies can launch gambling products, generate profits, and then litigate in court later. This litigation-driven business model has resulted in 26 pending lawsuits to date, where states, tribal governments, and individual consumers argue that the prediction markets violate federal, state and tribal law and exploit consumers. While prediction markets argue in court that their contracts on the outcomes of sporting events are not gambling, they openly advertise that their contracts are “legal” gambling. Prediction markets have spent millions of dollars to advertise their products as legalized sports betting in all 50 states. One advertisement from January by prediction market Kalshi stated that it is “The First Nationwide Legal Sports Betting Platform.” Kalshi also ran advertisements during the college basketball tournament in Texas and California – where all sports betting is illegal – that said “Make $ on March Madness” and “Legal in Texas” and “Legal in California”. Another advertisement said “Sports betting is officially legal in Texas with Kalshi. The first federally regulated exchange where you can bet on real outcomes.” Again, all sports betting is illegal under state law in Texas and California. Thus, these prediction markets are offering contracts on sport event outcomes and intentionally misleading consumers and purposefully thwarting state laws.
As noted above, this amounts to nationwide online gambling that has deluged every corner of the United States. For decades, state and tribal governments have debated concerns about the impacts
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