In 2025, the legal sports betting industry in the US recorded $166.94 billion in wagers, generating $16.96 billion in revenue and $3.71 billion in state tax payments. According to reports, 35% of bettors are reducing their use of traditional sportsbooks in favor of prediction markets like Kalshi and Polymarket.
Kalshi operates as a federally designated market for event contracts, arguing that its offerings are swaps overseen by the Commodity Futures Trading Commission rather than gambling. State regulators contend these contracts are sports bets subject to state gaming laws, creating a conflict over whether federal commodities law preempts state rules.
The legal landscape remains divided. The Third Circuit previously ruled in favor of Kalshi regarding preemption. However, on August 28, 2026, the Ninth Circuit ruled against the company in a Nevada case, and on September 28, 2026, the Sixth Circuit rejected an appeal, allowing Ohio and Tennessee to pursue enforcement.
The company is also involved in other legal disputes, including litigation with the Ho-Chunk Nation in Wisconsin and various consumer class actions. On September 17, 2026, Kalshi and Montana mutually dismissed their lawsuits to pause enforcement pending further federal appellate review.
