How Kalshi and Prediction Markets Are Disrupting Sports Betting

Gaming attorney Johnny ElHachem was interviewed for an ESPN story covering ongoing litigation surrounding Kalshi, an online financial exchange, and the implications of the case outcomes for the wider sports betting market. Kalshi's platform offers sports-based event contracts in which users can trade on yes-or-no questions, such as whether a team will win the Super Bowl, and has been certified as an exchange regulated by the Commodity Futures Trading Commission (CFTC). Gambling regulators contend the company's offerings constitute sports betting, which requires a state license, and multiple states have sent cease-and-desist letters in recent months. In response, Kalshi argues that as an exchange, it operates under federal, not state, jurisdiction. Mr. ElHachem explained that court rulings in Kalshi's favor could open the door for greater use of event contracts that fall outside traditional sportsbook regulations. He added that for a nascent industry still figuring out how to govern itself, these decisions could prove significant.

"How this shakes out fundamentally impacts where the line is drawn between financial speculation and regulated betting," he said. "And I think it reshapes the entire sports wagering ecosystem."

READ: How Kalshi and Prediction Markets Are Disrupting Sports Betting