"Prediction market platform Kalshi is surging so much in Trump's second term, that it's prompted something of an arms race: Robinhood, Coinbase, FanDuel and DraftKings have all announced rival services in a bid to tap into prediction market mania, as traders put up hundreds of thousands of dollars speculating about future events. But the long-term outlook for this nascent industry could hinge on how a series of legal battles define a single word: Gaming."
"Kalshi allows people to place wagers on sports, news events and all manner of cultural happenings, processing billions of dollars in weekly bets and inking partnerships with major news organizations. While the high-dollar gambles on current events grabs headlines, about 90% of activity on Kalshi is sports-related. Yet Kalshi is not considered a sports gambling site, like FanDuel and DraftKings. Instead, they are overseen by the Commodity Futures Trading Commission, an agency that regulates "futures contracts," which Kalshi says it offers."
"Under federal law, "gaming" is a prohibited type of futures contract something that is now being litigated in numerous federal courts. The future of Kalshi, and perhaps the entire prediction market industry, could depend on convincing courts that placing monetary wagers on sports events is not a type of game. There are nineteen federal lawsuits pending at various stages grappling with the app's legality against the backdrop of state gambling laws that have traditionally had oversight over the activity of bettors, according to a review by NPR. Kalshi has enlisted a cadre of high-profile lawyers to press their case that sports betting on the site is not a "game" and that state laws don't apply to them, since they are federally regulated. "Mountains of authority confirm that the [federal law] preempts application of state law," wrote Kalshi lawyer Neal Katyal in a brief this week in a case pending before the 4th U.S. Circuit Court of Appeals."
Kalshi has attracted major rivals and large trader stakes as a prediction market platform that processes billions in weekly bets and partners with news organizations. About 90% of Kalshi activity centers on sports, though the platform is regulated by the Commodity Futures Trading Commission as offering futures contracts rather than as a sports gambling site. Federal law bars certain "gaming" futures contracts, and that statutory definition is the focus of litigation. Nineteen federal suits challenge Kalshi's legality alongside state gambling regimes. Kalshi argues federal regulation preempts state law and has hired prominent lawyers to press that case.
Read at www.npr.org
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