What’s next for Kalshi?

The financial exchange and prediction market that lets U.S. bettors trade on the outcome of future events has continued its expansion into sports.

This has some wondering if it will evolve into a competitor to traditional online sportsbooks.

Kalshi’s strong performance during Super Bowl LIX- in which the Philadelphia Eagles beat the two-time defending champion Kansas City Chiefs 40-22- suggests it could become a go-to platform for sports betting. It has already caused some consternation from sports betting operators, who believe that prediction markets like Kalshi and Crypto.com pose an unfair advantage because they’re not required to follow state-by-state gambling regulations or taxation laws.

Similar to the stock market, Kalshi is a federally regulated trading platform on which users can buy and sell contracts for real-world events. This is fundamentally different from traditional sportsbooks, which require that bettors play against the house.

While the platform is far from a new phenomenon, it gained popularity in October after it won a legal battle to offer odds on the U.S. presidential election. Since then, Kalshi has taken in about $2 billion in bets, according to the company.

Kalshi had sought permission from the Commodity Futures Trading Commission in 2023 to allow Americans to wager on control of the House of Representatives and Senate, but ran into concerns about unregulated gaming. Kalshi then sued, arguing that the CFTC didn’t have authority to limit its efforts. A D.C. District Court judge ruled in favor of Kalshi, ruling that its political events contract did not involve either unlawful activity or gaming.

As Kalshi looks to strengthen its position, it has a few big political backers in U.S. President Donald Trump and newly nominated CFTC chairman Brian Quintenz, a Kalshi board member who served as commissioner of the CFTC during Trump’s first term in office. Additionally, Kalshi recently named Donald Trump Jr. a strategic advisor.

This represents a stark difference from former President Joe Biden, who took a hardline stance against the so-called prediction markets Kalshi operates.

“The CFTC plays a critical role in maintaining robust hedging and price discovery markets that are the envy of the globe,” Quintenz said last week on LinkedIn. “The agency is also well poised to ensure the U.S.A. leads the world in blockchain technology and innovation.
“I look forward to working with President Trump’s incredible financial regulatory team.”

Documents filed last month by Kalshi suggest it could soon cover more day-to-day sports outcomes, as opposed to just championship events like the Super Bowl, NBA Finals, NHL Stanley Cup and March Madness.

What does this mean for U.S. sportsbooks? Sports betting has exploded in recent years, with 38 states plus Washington, D.C., now legally operative. That number is expected to expand to 39 when Missouri launches this fall.

Sports betting revenue hit a record $13.7 billion in 2024, with 95% of the $147.9 billion wagered done online.

Although Kalshi isn’t an exact copycat of sports gambling, it could be an attractive alternative for bettors who grow tired of limited odds and stricter regulations. Perhaps only time will tell.