Kalshi CEO Says Government Oversight of US Prediction Markets Would Destroy Them

Tarek Mansour, the company's CEO, said he is 'very comfortable' with the pending outcome of the current legal dispute over who has the authority to regulate prediction markets.

ARLINGTON, Va. — The CEO of Kalshi, the company at the center of a high-profile legal battle over the future of prediction markets in the United States, said the battle will ultimately decide not whether the fast-growing industry is regulated by states or a federal agency, but whether it will or will have to be regulated overseas by the Fed.

"We feel very good about where we stand overall," Kalshi CEO Tarek Mansour said Wednesday at the DC FinTech Week event near Washington.

Mansour rejected the argument that sports betting — an explosively growing element of the contracting space — does not have significant economic consequences that would justify the transactions' status as federally regulated financial contracts.

"The idea that sports don't have economic consequences is ridiculous," he said.

A growing list of states have challenged Kalshi and other market prediction firms in court, accusing them of engaging in illegal sports betting that falls under the jurisdiction of state gambling regulators. But Calci and its federal regulator, the Commodity Futures Trading Commission, have argued in court that the federal agency is the only appropriate overseer of the prediction markets.

So far, the dispute has made its way to a number of federal appeals courts, where the courts now side with one major ruling from Calci and two from the states. As a result, New Jersey asked the US Supreme Court to review the case, and prominent groups have shared opinions with the Supreme Court, including the National Football League.

"It's not a choice of state versus federal market. It's a choice of whether the prediction markets exist in the United States or whether they go offshore," Mansour said.

He argued that the regulatory relationship considered Kalshi from the outset, and that it "falls really nicely under commodity definitions." He said the Commodity Exchange Act is a "really beautiful statue" that allows for a shift from agricultural futures to oil and metals to less tangible financial products like swaps.

On Wednesday, Mansour also responded to allegations of increased trading volume in the Bitcoin and Ether permanent futures markets on his platform. He said there were "a lot of crazies" on social media site X, formerly Twitter. The questions focused on the most frequently repeated trade sizes that represented a significant portion of the overall volume. Mansour once again pointed to fixed-size orders from market makers at the Washington event.

"Oh my god, there's a spike," tweeted Twitter. "You know, it's got to be like volume up or whatever." It is none of these."

"Maybe the broader point is how much people misunderstand the markets," he said. "They're just complicated. They're not easy to understand."

The CFTC has taken swift action to strengthen its predictive power in the markets. Last week, it issued another rule and proposed another rule that would have included event contracts in the definition of swaps, expressly controlled by the agency and not by state gambling regulators.

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