Kalshi CEO: ‘State law doesn’t really apply’ to us

Summary

Last week, prediction market startup Kalshi sued New Jersey and Nevada after they tried to shut down its recently launched sports trading operation. In the lawsuit, Kalshi claimed that, since they’re a federally regulated platform, state gaming commissions don’t have the authority to set rules for them. “We’re not necessarily very concerned [because] we are regulated at the federal level,” said Kalshi CEO Tarek Mansour last week at a StrictlyVC event in San Francisco. “The state law doesn’t really apply.” If Kalshi wins these lawsuits, the startup could secure its place in the lucrative market of sports betting. However, the legal challenge may also pave the way for a clash between state regulators and the Trump administration. This isn’t the first time Mansour has challenged a regulator’s authority. Last year, Kalshi won a major legal battle against the Commodity Futures Trading Commission (CFTC), allowing it to process more than $1 billion in trades based on the outcome of political elections in 2024. In battling the CFTC, “we’ve had to eat a lot of s— over the last five years,” said Mansour. “I’d do it again in heartbeat.” From political elections to sports In January, Kalshi made the leap into prediction markets for sporting events, allowing users nationwide to bet on the outcomes of March Madness and the Super Bowl — even in the 11 states where gambling is illegal. However, six states where sports wagering is legal — including Nevada, New Jersey, Illinois, Maryland, Ohio, and Montana — sent Kalshi cease-and-desist letters claiming its sports prediction markets are de facto sports bettings. State gaming commissions argue Kalshi is not properly licensed, nor is it paying state taxes on the sports trades it offers. “We have a license. It’s by the CFTC,” said Mansour. Mansour argued onstage that the real motivation behind these cease-and-desist letters was a “massive casino lobby that’s unhappy” about Kalshi’s sports trading contracts. On Tuesday, Kalshi notched it...