Kalshi announced the Coalition for Prediction Markets today with backing from five companies: Kalshi, Crypto.com, Robinhood, Coinbase and Underdog. The new trade group aims to defend federal regulation through the Commodity Futures Trading Commission and resist state gaming regulators attempting to block their services.
The formation marks an escalation in a brewing conflict over whether prediction markets—which allow users to trade contracts on the outcomes of elections, sporting events and economic indicators—constitute gambling under state law.
At least 10 states have issued cease-and-desist orders or filed complaints against prediction market platforms, arguing they require gambling licenses to operate legally. California Attorney General Rob Bonta is preparing to join the fight, planning to sign onto an amicus brief supporting Maryland’s case against Kalshi and considering filing the state’s own lawsuit, per InGame reporting.
The “is it gambling” debate
At the heart of the dispute is a fundamental disagreement over what prediction markets actually are. Operators insist they offer commodity contracts regulated by the CFTC, not gambling. State regulators counter that putting money on a basketball game looks identical whether done through Kalshi or a traditional sportsbook.
“I just don’t really know what this has to do with gambling,” Kalshi CEO Tarek Mansour told Axios earlier this year. “If we are gambling, then I think you’re basically calling the entire financial market gambling.”
The distinction matters legally. Kalshi argues users trade contracts peer-to-peer rather than betting against a house, with the platform earning money from transaction fees like a broker rather than from losing wagers. The company argues the Commodity Exchange Act preempts state gambling laws.
State regulators reject this framing. “The purchase of the contract is indistinguishable from the act of placing a sports wager,” Maryland gaming officials wrote in an April cease-and-desist letter. Connecticut regulators similarly argued the platforms are “conducting unlicensed online gambling, more specifically sports wagering.”
The debate has spilled onto social media, with heated exchanges between Kalshi executives and industry critics. When questioned about Kalshi’s market-making practices, Sara Slane defended the company’s model while industry veterans have alerted the platform of being “condescending” and making overblown claims about its importance to financial markets.
Academic Zephyr Teachout flatly called Kalshi “a gambling company operating an illegal sports betting platform,” prompting sharp pushback from company representatives. A similar tweet from gaming consultant Dustin Gouker has reached nearly a million views.
Kalshi is a gambling company https://t.co/ppe0iWmaBz
— Dustin Gouker (@DustinGouker) December 4, 2025
Federal courts have delivered mixed results. While Kalshi won preliminary injunctions in New Jersey and initially in Nevada in April, a Nevada judge reversed that decision in November, ruling the company’s interpretation “upsets decades of federalism regarding gaming regulation.” Maryland courts denied Kalshi’s request for a preliminary injunction in August. Multiple cases remain under appeal and the issue could eventually reach the Supreme Court.
“Americans deserve clarity, not 50 conflicting interpretations,” said Sara Slane, an executive board member of the coalition and head of corporate development at Kalshi. She added that Kalshi spent years working with the CFTC to establish federal safeguards for prediction markets.
The dispute has fractured the broader gambling industry. The American Gaming Association, whose members include casino operators like MGM and Caesars, has launched an advertising campaign attacking prediction markets as unlawful sports betting. Recently, three major sports betting companies—DraftKings, FanDuel and Fanatics—recently left the trade group to launch a prediction markets platform.
Matt David, president of North America and Chief Corporate Affairs Officer at Crypto.com and a coalition board member, described prediction markets as civic infrastructure that democratizes financial participation. The coalition will focus on establishing nationwide integrity standards to prevent insider trading while defending against what it calls state overreach into federally regulated markets.
Additional companies are in talks to join the coalition, according to the announcement.
Prediction markets have grown rapidly in recent months. The coalition claims nearly half of Americans under 45 have used an online financial or prediction market, though this figure has not been independently verified. Kalshi recently raised $1 billion at an $11 billion valuation despite ongoing regulatory challenges.
