(SeaPRwire) –
By: Jonathan Barrett
The U.S. prediction market is in a jurisdictional knife fight. Kalshi CEO Tarek Mansour called it out Wednesday at DC Fintech Week near Washington. He drew a blunt line. Federal oversight keeps event trading alive on American soil. State regulators block it under gambling statutes. His warning was not hypothetical. “It’s a choice of whether prediction markets exist in the U.S. or whether they go offshore,” he said. That is the sentence every CFTC commissioner and state attorney general needs to hear. The fight is not about definition. It is about survival for an entire class of financial products. American capital either participates in this asset class or gets shut out. The offshore alternative is real and growing.
The CFTC proposed on October 9 to treat prediction market event contracts as swaps. That category falls under federal derivatives law. A separate interim rule excludes casino-style games from the swap definition. Federal appeals courts are split. One ruling supported Kalshi’s federal oversight argument. Two others favored state authority. The Supreme Court justices have not agreed to hear New Jersey’s case. Kalshi must respond to the petition by November 9. The proposed change covers contracts linked to sports, politics, weather and culture. Each piece of this framework remains subject to the rulemaking process. The legal foundation is still under construction. This remains the only credible federal regulatory answer. States and the CFTC fight over who writes the rules.
State officials have taken Kalshi and other operators to court. They argue contracts tied to game results amount to sports betting. The NFL has backed New Jersey’s Supreme Court appeal. The league also raised concerns about consumer protections and game integrity. State attorneys general seek to apply gambling rules to prediction markets. Each jurisdiction treats sports contracts differently. Kalshi’s defense rests on the Commodity Exchange Act. Mansour says that law gives Washington authority over markets that extend beyond traditional commodities. He framed sports outcomes as carrying economic consequences. This is not a new legal theory. States have long claimed gambling jurisdiction over any market tied to competitive results. The NFL’s backing gives states extra political ammunition.
More firms are chasing U.S. prediction market access. Last week, Blockchain.com applied for two CFTC licenses. One would cover prediction markets. The other covers crypto derivatives. The CFTC’s interim rule draws a deliberate line between regulated contracts and casino-style gambling. That boundary is not accidental. It is meant to keep market makers out of state gambling regimes. For established players like Kalshi, the federal track remains the only viable path. For newcomers, license applications double as political signals. The market is crowded and the legal floor is still being poured. Each new applicant adds weight to the federal oversight argument. The flood of applications proves the market wants this. The CFTC needs every applicant it can get.
Mansour faced questions about repeated transaction sizes in Kalshi’s Bitcoin and Ether perpetual-futures markets. He rejected claims that those patterns showed inflated volume. Market makers place fixed-size orders, he explained. Those fixed sizes produce repeated trade amounts in settlement records. He criticized speculation about the figures. Trading activity is difficult to interpret without understanding how orders actually work. For new entrants like Blockchain.com, the regulatory fog demands compliance hedging. License applications serve as insurance against an uncertain legal landscape. Every player is building redundancy into their regulatory strategy. No operator wants to be caught without a federal permit when states close the door. Regulation shapes how these markets trade. The regulatory fog is only getting thicker.
The first offshore prediction market opens before November 9, and Kalshi’s warning becomes an obituary rather than a caution.
Author bio: Jonathan Barrett is a lead focus editor for an independent overseas public affairs weekly, specializing in regulatory policy analysis and enforcement tracking across financial and technology sectors.