A controversial prediction market platform founder declared his company answers to the Commodity Futures Trading Commission (CFTC) only.
Key takeaways
- Mansour said during an interview Friday with TechCrunch he isn’t “necessarily very concerned” about five cease-and-desist letters over his sports-outcome markets.
- Kalshi, which currently offers prediction markets in 50 U.S. states, says it's regulated by the CFTC, not state regulators, and doesn’t need a gaming license.
- The Kalshi founder believes casino lobbyists are behind the orders for his site to stop operating in legal sports betting states.
Kalshi’s Tarek Mansour stated during an interview with TechCrunch on Friday he isn’t “necessarily very concerned” about cease-and-desist orders he received from five U.S. states. Those jurisdictions argue his sports-event outcome markets, which are similar to sportsbook odds, go against these states' legal sports betting regulations and require a license to operate.
Mansour doesn’t see that stopping him from offering his markets in all 50 states.
“We are literally like a financial exchange, but the underlying trading is events,” Mansour said. “The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”
Mansour said he received cease-and-desist letters from Nevada, New Jersey, Ohio, Illinois, and Montana, but Kalshi is under “exclusive jurisdiction.” He compared Kalshi’s situation to grain futures trading in Kansas, where state law prohibits it but federal law lets it occur.
“The state law doesn’t really apply when you’re a federally regulated exchange,” Mansour said.
‘Not happy about this’
Kalshi feels so strongly about that position that it filed lawsuits against Nevada and New Jersey to continue offering sports-event contracts in all 50 U.S. states.
“The reason why states are sending us these cease-and-desists is because there are massive casino lobbyists not happy about this,” Mansour said.
The CFTC hasn’t explicitly stated it’s in favor of sports-outcome markets, but hasn’t asked Kalshi to stop offering them, either.
Mansour argues financial derivatives are different than the true definition of gambling because they justify the market by discovering prices and managing risk. The company’s founder said it’s like states deciding the New York Stock Exchange can’t operate in their jurisdictions without a gaming license.
“We do not fall under that model. There hasn’t been a single financial derivative set up in the U.S. or otherwise that hasn’t been called gambling at the beginning. It’s consistently the same thing,” Mansour said.
How it started
The CFTC originally blocked Kalshi from offering election outcome markets in 2024, but the company received a favorable ruling from federal judges to let users place contracts on several events, like the presidential race.
Kalski began diving into sports prediction markets earlier this year with Super Bowl LIX and expanded with March Madness, which generated over $200 million in contracts during the NCAA tournament's first weekend. Kalshi offers its sports markets through the popular trading platform Robinhood, which also receieved cease-and-desist letters.
“It has an economic utility behind the speculative activity, and that’s what makes it a financial instrument and not a gambling instrument,” Mansour said.
Taking on Nevada
The Nevada Gaming Control Board was the first state regulator to take action against Kalshi when it told the platform in early March to stop operating unlicensed gaming. Mansour said Friday the Nevada sports betting regulatory agency released the cease-and-desist letter publicly before Kalshi received it.
“(Kalshi) had to call four times to see if they were going to send it,” Mansour said. “Legally, you cannot receive a cease-and-desist on Twitter.”
Kalshi received an extension to operate until mid-March but filed the lawsuit late last month, claiming the cease-and-desist letter violated the Commodity Exchange Act.
