Kalshi says it’s not a sportsbook. Its legal fight with states says otherwise

While prediction market giant Kalshi took another court loss late last week, one of the company’s top executives is more determined than ever to prove that Kalshi’s business model isn’t sports gambling and will be able to co-exist with legal sportsbooks nationwide.

The New York-based market that provides a platform for traders to swap sports results the same way they predict crop futures while regulated by the federal Commodity Futures Trading Commission is expected to be the biggest topic of conversation at this week’s Global Gaming Expo in Las Vegas.

An estimated 25,000 people from 120 countries are attending the four-day G2E, sponsored by the American Gaming Association, this week at The Venetian.

Kalshi nor any of its competitors have booth presences at the trade show that opens Tuesday. But sports prediction markets and how they affect legal sportsbooks in 39 states, including Nevada, will be discussed and debated in keynote addresses and educational sessions all week.

Different business model

But the way Luana Lopes Lara, Kalshi’s co-founder, sees it, prediction markets and sportsbooks have completely different business models and entities like Kalshi should be able to operate anywhere in the country.

Lara, who co-founded Kalshi in 2018 with her MIT graduate husband Tarek Mansour, received regulatory approval from the CFTC in 2020 and publicly launched in July 2021, explained why the company doesn’t believe it is offering sports wagering in an exclusive interview with the Review-Journal.

“There’s a very big difference in the model between a casino or sportsbook and an exchange,” she said. “In exchanges, we don’t actually trade against our customers. Our customers are trading against each other. They are the ones setting the price. In a traditional casino or sportsbook, there’s a monopoly on price and they make money when users lose.”

Kalshi got on the Nevada Gaming Control Board’s radar in March 2025 when regulators accused the company of illegally taking sports bets through its online prediction market. Ever since then, Kalshi and the Control Board have been skirmishing back and forth in both federal and state courts.

The Control Board claimed victory in April when a Carson City judge ruled Kalshi could not write contracts involving sports results with Nevada residents and gave the company a month to develop geofencing to prevent Nevadans from accessing the Kalshi site. Lara said the company complied, but that Nevada regulators continue to badger it because it’s the largest and most visible of the prediction markets.

“They’re only targeting Kalshi for this,” Lara said. “And they’re not looking at everyone else where they actually don’t have even the level of implementation that, that we have that from, for example, using GeoComply, which is allowed in the state. I think it just shows like how Kalshi is kind of being targeted in the state and they’re not targeting anyone else.”

Underage participation, taxation

Two other areas of concern regulators have expressed about Kalshi are the company’s abilities to restrict underage participation and the fact that it pays no Nevada gaming taxes. Lara said she’d put Kalshi’s age restriction policies up against other gaming jurisdictions in the country and that there’s nothing stopping states from taxing the company.

“I would actually claim that we have more protection than most states against minors,” Lara said. “Obviously, minors cannot trade on cash whatsoever. We use a lot of different checks and balances and signups from ID, Social Security numbers and all of that. We have surveillance on top of it.

“We use a lot of different providers that use AI machine learning to look for other indications that people are minors to make sure that none of them come in. And we know every month the number of minors that try to sign up and we block them. We take it extremely seriously.”

As for taxation, Lara said there’s nothing stopping states from taxing the company.

“They are able to tax us,” she said. “And I think there have been states that already are proposing taxes on prediction markets and there’s nothing that stops them from taxing us.”

Nevada casinos, including sportsbooks, pay a 6.75 percent tax on gross gaming income.

Lara said one of the reasons Kalshi works so hard to preserve federal oversight as opposed to states is that each state has its own set of rules.

Operational patchwork

“On state regulation, there’s a patchwork of state regulation of what’s allowed in one state and what’s not allowed in another state,” she said.

“That causes a lot of overhead (expenses) and in the end, it is a worse experience for consumers at the end of the day, which will lead to my second point, which is customer protection. If you’re actually able to have things like, for example, self-exclusion, deposit limits, surveillance, responsible trading at a federal level and principles that Congress put together, or the CFTC, which is obviously enabled by Congress to put these things together, having that federal framework versus the patchwork of states” is better for both consumers and the business.

She noted that unlike some of Kalshi’s competitors that operate offshore, Kalshi has some topics it will not take predictions on, particularly if they involve death, assassination or terrorism.

Supreme Court next?

Like many analysts who have been studying prediction markets, Lara believes disputes between prediction markets and states that offer gambling ultimately could be decided by the U.S. Supreme Court.

Last week, Kalshi suffered a loss in the Sixth Circuit Court of Appeals when it ruled that states like Ohio and Tennessee can regulate sports events contracts under state gambling laws. That ruling is similar to a Ninth Circuit decision involving Nevada, but in opposition to a Third Circuit decision from New Jersey.

Because of the split, analysts believe the Supreme Court will take up the issue sometime next year.

“I’m not a lawyer,” Lara said. “But we have a legal team that we defer to on this, but we’re very, very confident in our legal position. I think we’ve had some very great wins in court, like the most important one so far, the Third Circuit has sided with us.

“In terms of whether we’ll go to the Supreme Court or not, I think we’ll have to wait and see. I don’t know, but it’s possible for sure.”