Kalshi CEO says legal battle could reach US Supreme Court
The CEO of prediction market platform Kalshi, Tarek Mansour, says the legal dispute over regulation of the controversial industry could eventually reach the US Supreme Court.
Speaking on the Reuters Econ World podcast, Mansour outlined his belief that the legal process, which includes dozens of ongoing lawsuits across the US, could ultimately end up at the highest court.
Several US states to have sued Kalshi argue that the prediction market’s sports event contracts should be subject to state gambling laws and taxation requirements.
Kalshi maintains that its contracts are financial derivatives that are regulated by the Commodity Futures Trading Commission (CFTC), meaning they are exempt from state oversight.
Federal appeals courts have issued mixed rulings, with Kalshi facing setbacks in states like Nevada but winning an appeal in a dispute with New Jersey. The state subsequently asked the Supreme Court to review the decision.
Mansour declined to predict the outcome of a potential Supreme Court case but expressed confidence in its legal position, arguing that federal law gives the CFTC authority to regulate the contracts.
He stated that sports accounted for around 65% of Kalshi’s revenue, down from 95% nine months earlier. Reuters also reported that Kalshi was valued at approximately US$40 billion in a recent funding round.
A Supreme Court ruling in Kalshi’s favor could reinforce its federal regulatory position and support its plans to compete with established exchanges such as CME Group and Intercontinental Exchange, the parent company of the New York Stock Exchange.
However, a ruling against the company could expose its sports event contracts to state gambling laws and licensing requirements.
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
Dig Deeper
Related stories
2026/09/24: US gaming lawmakers urge Supreme Court to hear Kalshi case
2026/09/10: Utah court wins in Kalshi dispute over injunction but fight continues
2026/09/03: New Jersey seeks US Supreme Court review of Kalshi sports markets
2026/10/07: NAGRA and IAGR seek US Supreme Court review of sports event contracts
2026/09/24: US gaming lawmakers urge Supreme Court to hear Kalshi case
2026/09/10: Utah court wins in Kalshi dispute over injunction but fight continues
2026/09/03: New Jersey seeks US Supreme Court review of Kalshi sports markets
2026/10/07: NAGRA and IAGR seek US Supreme Court review of sports event contracts
The Backstory
A federal-versus-state clash moves toward a defining venue
Kalshi’s fight over sports event contracts has become a test of how far federal commodities regulation can reach into territory long controlled by state gambling authorities. The company argues that its contracts are financial derivatives overseen by the Commodity Futures Trading Commission, giving it a single federal regulator and shielding it from state-by-state gambling rules. State officials counter that contracts tied to sports outcomes function as sports bets, regardless of how they are structured or listed.
That conflict has escalated because courts have not answered the question consistently. Some federal judges have accepted Kalshi’s view that sports contracts can fall within the Commodity Exchange Act. Others have allowed states to enforce gambling statutes against the company, saying federal law does not clearly displace state authority over sports wagering. The result is a widening legal split that has drawn in attorneys general, gaming regulators, lawmakers and now petitioners pressing the U.S. Supreme Court to intervene.
The stakes are commercial as well as constitutional. Kalshi’s sports markets have become a major part of its business, even as the company says it is diversifying beyond sports. A ruling that affirms federal preemption could give prediction markets a powerful route into sports-related products nationwide. A ruling for the states could force operators to seek gambling licenses, comply with age and responsible-gaming rules, pay state taxes and possibly withdraw from jurisdictions where they cannot or will not be licensed.
New Jersey gave the dispute its Supreme Court vehicle
The most direct path to the high court came from New Jersey, where state officials asked the justices to review whether Kalshi can offer sports event contracts without complying with state sports betting laws. The petition followed an April 2026 decision by the 3rd U.S. Circuit Court of Appeals that sided with Kalshi and found that the CFTC had exclusive authority over the contracts. In that ruling, the court treated the products as swaps, a category of financial derivative regulated under federal commodities law.
New Jersey’s filing argued that the products are, in practical effect, sports wagers and should be subject to state licensing, age limits and other gambling safeguards. The state also pointed to broad opposition from other jurisdictions, saying more than 40 states had resisted Kalshi’s position. That challenge, detailed in New Jersey’s request for Supreme Court review of Kalshi sports markets, framed the issue as one with national consequences rather than a localized enforcement dispute.
The New Jersey case became more significant because it sits on one side of an emerging circuit split. If the Supreme Court accepts the case, it could decide not only whether the 3rd Circuit was right about CFTC exclusivity but also how courts should classify sports-linked event contracts under the Commodity Exchange Act. That question matters beyond Kalshi because other platforms and gambling operators are watching whether federal event-contract regulation can be used to bypass traditional state betting regimes.
Other circuits have strengthened the states’ hand
Kalshi’s position has been weakened by rulings outside the 3rd Circuit. In Nevada, the 9th U.S. Circuit Court of Appeals declined to block state enforcement action, rejecting the company’s attempt to use federal law as a shield against gambling regulation. That decision did not dispute that the CFTC regulates swaps, but it questioned whether Congress clearly authorized sports wagers to be treated as swaps in a way that would override state gambling law.
The pressure increased when the 6th U.S. Circuit Court of Appeals ruled that Ohio and Tennessee could enforce their gambling laws against Kalshi. As described in the 6th Circuit decision rejecting Kalshi’s bid to block state regulation, the court said Kalshi had not shown that its sports event contracts were protected from state oversight. The panel went further, saying that even if the products qualified as swaps, the Commodity Exchange Act would not necessarily prevent states from applying gambling laws.
Those rulings created the legal patchwork Kalshi says is unworkable. In one circuit, the company can point to a favorable decision suggesting federal law preempts state regulation. In others, states can cite appellate authority allowing enforcement. For a nationwide exchange, that inconsistency affects product availability, compliance risk and investor expectations. For states, it determines whether they can preserve sports betting frameworks built after the Supreme Court’s 2018 decision allowing legalized wagering outside Nevada.
Utah, Ohio and Tennessee show the enforcement risk
The litigation is not abstract. State regulators and attorneys general have pursued Kalshi through fines, enforcement threats and court proceedings. Ohio regulators previously issued a $5 million fine, alleging the company offered unlicensed sports betting. Tennessee challenged an order that had temporarily limited its ability to enforce state law. Those disputes were later combined before the 6th Circuit, which allowed both states to proceed.
Utah has also emerged as a key battleground because its anti-gambling laws are among the strictest in the country. Kalshi sued Utah officials in February 2026, arguing that CFTC oversight preempted state enforcement. A federal judge rejected that position in August, and a later appellate panel refused to grant Kalshi an injunction that would have protected it while the appeal continued. The ruling covered in Utah’s injunction win in the Kalshi dispute allowed the state to keep enforcing its laws while leaving the broader preemption issue unresolved.
That pattern matters because interim orders can shape markets before final judgments arrive. If states can continue enforcement while appeals proceed, Kalshi may face operational limits even in cases that remain legally unsettled. If courts block enforcement during litigation, prediction markets gain time to build liquidity, customers and political support. The procedural fights over injunctions therefore carry practical consequences for how quickly the industry can expand.
Regulators and lawmakers fear a broader workaround
Gaming regulators have urged the Supreme Court to step in because they see the Kalshi dispute as a threat to core gambling safeguards. The North American Gaming Regulators Association and the International Association of Gaming Regulators filed a joint brief supporting review, citing uncertainty over the line between federal commodities oversight and state gambling control. Their concerns, outlined in the NAGRA and IAGR push for Supreme Court review of sports event contracts, include minimum-age rules, self-exclusion, integrity monitoring and restrictions on prohibited participants.
The National Council of Legislators from Gaming States has made a similar argument from the policymaking side. In an amicus brief backing New Jersey’s petition, the group warned that a ruling insulating prediction markets from state gambling regulation could invite other operators to recast gambling products as federally regulated financial contracts. That concern was central to the gaming lawmakers’ request that the Supreme Court hear the Kalshi case.
Congress also has begun to circle the issue. Democrats on the Senate Banking Committee have called for a hearing on prediction markets, while Republican committee leaders have met privately with Kalshi Chief Executive Tarek Mansour. The congressional interest reflects a broader policy question: whether existing commodities law is equipped to govern mass-market contracts tied to sports outcomes, elections and other events that look different from traditional futures products.
A ruling could redraw the sports betting map
If the Supreme Court takes the case, its decision could establish whether sports event contracts sit primarily under federal commodities law or remain subject to state gambling regimes. A Kalshi victory would bolster the company’s argument that a nationally regulated exchange can list contracts without obtaining gambling licenses in every state. It could also encourage competitors to expand event-contract offerings, increasing pressure on sportsbooks that operate under costly state-by-state licensing systems.
A state victory would carry different consequences. Kalshi could be forced to comply with gambling laws where sports markets are deemed betting products, including licensing, taxation, responsible-gaming rules and local enforcement requirements. That outcome could slow prediction-market expansion and preserve the regulatory structure states built around sports wagering. It also could clarify that CFTC registration is not a universal exemption from gambling law when contracts are tied to sporting events.
Either way, the case has become a proxy for a larger fight over market design, consumer protection and regulatory jurisdiction. Kalshi says uniform federal oversight is necessary because exchanges cannot function when rules change at each state line. States say that view would let financial-labeling displace gambling laws enacted to protect consumers and preserve market integrity. The Supreme Court, if it accepts the dispute, would be asked to decide which regulatory system controls when those two frameworks collide.
