The CFTC-backed prediction market faces lawsuits from 18 states alleging unlicensed sports betting operations.
Kalshi, a U.S.-based prediction market, is in preliminary discussions with investment banks regarding a potential initial public offering. The move comes amid heightened regulatory scrutiny as 18 states have filed lawsuits against the platform and peers like Polymarket, accusing them of operating illegal gambling services without state licenses.
State authorities argue that sports event contracts require local licensing, while Kalshi and the CFTC maintain these contracts qualify as federally regulated swaps. The CFTC has intervened in multiple lawsuits, including cases in Wisconsin, New York, and Arizona, to assert its jurisdiction over prediction markets. On May 14, the agency issued a no-action letter to ease reporting requirements for event contracts.
The legal disputes highlight a broader conflict over regulatory oversight of decentralized prediction platforms, which have seen rising trading volumes despite ongoing litigation.