Market overreacted to Kalshi’s NFL parlay launch
The stock market shock after the launch of prediction market Kalshi’s NFL parlay product may have been an overreaction, according to Sportico.
At the end of September, the launch sent shockwaves through the sports betting industry and briefly wiped billions off the market caps of DraftKings and FanDuel parent company Flutter.
Reports suggest, however, that Kalshi’s parlay business remains relatively small.
The new parlay feature saw US$6 million in trading volume during its first week, rising to US$10.1 million the next.
Between October 6 and 12, single-game parlays accounted for US$5.5 million and multi-game parlays for US$4.6 million, which was just 3.1% of the US$330.5 million traded on Kalshi’s NFL contracts that week, and only 1.1% of the platform’s total activity.
By contrast, parlays generate over 60% of sportsbook revenue and 30% of betting handle in US states such as Maryland, Illinois, and New Jersey.
However, Sportico highlighted that the market reaction is a sign of how effectively Kalshi, traditionally known for event-based prediction markets, has been encroaching on sports betting territory.
In September, its NFL contracts drew US$1.13 billion in volume, while college football added another US$811 million, making sports nearly 90% of its total activity.
The platform also recently announced that it had surpassed US$900 million in weekly volume for the second consecutive week, eclipsing its traffic from the 2024 US presidential election.
In its recent funding round, Kalshi raised US$300 million, valuing the company at US$5 billion.
Abi Bray brings strong researching skills to the forefront of all of her writing, whether it’s the newest slots, industry trends or the ever changing legislation across the U.S, Asia and Australia, she maintains a keen eye for detail and a passion for reporting.
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The Backstory
How a niche market moved into the sports mainstream
Kalshi’s evolution from an event-contract platform into a force in sports has redrawn competitive and regulatory lines over the past year. The company’s decision to offer NFL-linked contracts and parlays signaled a deeper push into turf normally occupied by sportsbooks. In September, Kalshi reported that its NFL contracts generated $1.13 billion in volume while college football added $811 million, bringing sports to nearly 90% of its activity, according to reporting on the market reaction to Kalshi’s NFL parlay launch. The company’s latest financing, a $300 million round that valued it at $5 billion, underscores investor bets that these markets can scale even as rules remain in flux.
The shift follows Kalshi’s court win on political contracts, which expanded its room to operate. After a federal district court sided with Kalshi on election trading, the Commodity Futures Trading Commission dropped its appeal, a move that cemented the platform’s foothold in regulated prediction markets and emboldened its product roadmap. The regulator’s retreat, summarized in coverage of the CFTC’s decision to dismiss the appeal, removed a major overhang for the company even as it stirred alarm among advocacy groups that see political-event contracts as akin to gambling.
With regulatory momentum at its back, Kalshi began to test how far event contracts could track sports outcomes without triggering state sportsbook rules. That strategy is now central to the market narrative — and the source of fresh legal and commercial friction.
Wall Street overreacted, but the threat narrative stuck
The immediate market response to Kalshi’s parlay debut shows how quickly investors are recalibrating the competitive map. Shares of DraftKings and Flutter briefly sold off after the product launch, but early data suggests the market move was outsized. In the first two weeks, Kalshi’s parlays saw $6 million then $10.1 million in trading volume; in the week of Oct. 6-12, single-game parlays were $5.5 million and multi-game $4.6 million — just 3.1% of NFL contract trading that week and 1.1% of overall platform activity, per the analysis of the parlay rollout. By comparison, parlays account for more than 60% of sportsbook revenue in mature states like Maryland, Illinois and New Jersey.
Even so, the selloff captured a real point: Kalshi is encroaching on a high-margin sportsbook franchise. The platform said it surpassed $900 million in weekly volume twice in a row, eclipsing traffic seen during the 2024 U.S. presidential cycle. Whether or not parlays become a material line of business, the episode clarified how investors now frame event contracts as a substitute for traditional bets when rules and liquidity allow.
Washington’s mixed signals on prediction markets
The CFTC’s posture has whipsawed between enforcement and accommodation. Its decision to abandon the Kalshi election case followed a district court ruling that the platform’s political contracts could proceed despite a proposed public interest review, as detailed in coverage of the agency’s appeal withdrawal. The move removed immediate legal uncertainty but raised alarms among reform advocates who argue that election wagering undermines public trust.
At the same time, personnel and policy debates have pulled prediction markets into broader fights over market structure and crypto oversight. During a June 10 confirmation hearing, Brian Quintenz, a former CFTC commissioner and a director on Kalshi’s board, faced questions about potential conflicts and his views on event contracts. The exchange, covered in reporting on Quintenz’s nomination and ties to Kalshi, highlighted the political stakes as lawmakers weigh the agency’s remit over new hedging tools. The hearing materials are public on the Senate Agriculture Committee’s site, including the nomination hearing docket and Quintenz’s written testimony, which frames prediction markets as part of a modern risk-transfer toolkit.
The net result is a patchwork: federal permission for some event contracts, coupled with intense scrutiny of where they blur into gambling and whether conflicts arise when industry executives cycle into policy roles.
States draw their own lines — and their attorneys general notice
Even with the federal case resolved, state-level regulators have asserted jurisdiction over sports-facing products. Ohio moved first. In a lawsuit filed Oct. 7, Kalshi accused the Ohio Casino Control Commission and Attorney General Dave Yost of overreach, saying threats to sportsbooks chilled partnerships and imperiled expansion. The state maintains that only licensed sports gaming operators can offer sports wagers, a position laid out in cease-and-desist directives and echoed by other attorneys general, according to coverage of Kalshi’s Ohio complaint. Massachusetts followed with its own suit alleging unlawful promotion and acceptance of online sports wagers.
These fights will shape whether event contracts can coexist with state sportsbook frameworks or must obtain the same licenses and meet the same data-sharing and responsible gaming obligations. For Kalshi, injunctions and declaratory relief are near-term goals, but the longer arc is about regulatory parity and the cost structure that parity implies.
Clashes with the NFL’s intellectual property guardrails
As Kalshi marketed NFL-linked products, it ran into another kind of boundary: league control over brands and data. The platform and rival Polymarket were accused of using NFL and NFLPA marks and player likenesses without approval in ads promoting season openers and marquee matchups, detailed in coverage of the IP disputes. League officials have signaled willingness to work with prediction markets if they meet the same standards demanded of sportsbooks, including information sharing.
Kalshi has argued in court that such requirements would be too costly for its model. That tension — between the economics of exchange-like event markets and the compliance load expected of books — sits at the center of how sports leagues, data providers and regulators will classify and condition these products.
Global ambitions meet hard borders
Even as domestic questions play out, Kalshi has telegraphed plans to expand to as many as 140 countries, including China and India. The choice of targets highlights the gap between addressable demand and legal feasibility. China maintains strict internet controls and a near-total ban on gambling outside state lotteries. India’s new national framework tightens restrictions on real-money gaming, prompting layoffs and product suspensions by major platforms. Kalshi’s intent, and the hurdles it faces, are outlined in coverage of the company’s international expansion plans. For context on India’s policy stance, the government has published updates on online gaming regulation, including an August brief detailing compliance and enforcement priorities.
The company reportedly has not enabled new account registrations in India, underscoring the practical limits of launching in large but tightly regulated markets. The global push may create leverage in friendlier jurisdictions, yet it also amplifies licensing and compliance costs — the same costs that define the debate at home.
Taken together, these threads explain the stakes around Kalshi’s latest product moves. Market participants saw competitive risk even before the numbers justified it. Policymakers continue to test where to draw lines between hedging and wagering. And the leagues that control the most coveted sports IP are signaling that access comes with conditions that could reshape the economics of prediction markets.
