Kalshi Unfazed by Cease-and-Desist Orders in Five States

Kalshi has no plans to back down despite the strong pushback in several states. In an interview with TechCrunch, the prediction market platform’s founder, Tarek Mansour said that he isn’t very concerned about the cease-and-desist orders his team has received.

Kalshi’s Leaders Are Not Concerned

Kalshi offers contracts on the outcomes of sports – a type of product that has gained significant popularity despite claims that it constitutes unregulated wagering. Unlike traditional sportsbooks, prediction markets such as Kalshi offer prediction contracts. This has positioned such companies under the jurisdiction of the Commodity Futures Trading Commission (CFTC) instead of state gambling regulators.

In his interview with TechCrunch, Mansour reasserted that his team would only answer to the CFTC and noted that he isn’t particularly concerned about the regulatory challenges in several states.

For context, several states have issued cease-and-desist orders against Kalshi, claiming that it offered unregulated betting. Kalshi, which is currently live in all 50 states, was ordered to leave Nevada, Illinois, Ohio, Montana, and New Jersey.

At the same time, the prediction market is being investigated in Connecticut.

Kalshi Will Stop if the CFTC Demands It

Mansour largely brushed off the cease-and-desist orders, emphasizing that it is under exclusive jurisdiction. He emphasized that the company operates like a financial exchange but trades event outcomes instead of other assets.

As a result, the founder argued that the only body Kalshi should answer to is the CFTC.

The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.

Tarek Mansour, founder, Kalshi

Kalshi’s strong conviction led it to launch lawsuits against Nevada and New Jersey, which are trying to block it from offering its products locally. Mansour suggested that the pushback against prediction markets is spearheaded by casino lobbyists who are not happy about the new format’s growth.

Mansour further argued that financial derivatives are not gambling since they have an element of discovering prices and managing risk. According to him, saying that Kalshi cannot operate is like saying that the NYSE cannot operate because it lacks a gaming license.

Additionally, Mansour critiqued Nevada for releasing the cease-and-desist order on X before Kalshi received it.

Prediction Markets Continue to Grow

In the meantime, prediction markets continue to grow in popularity. According to some, their model makes them more reliable for predicting the outcomes of certain events, especially elections, than traditional polls.

While political betting remains prohibited in the US, prediction markets have found workarounds, allowing players to put money on the line when predicting who will win.

However, many have opposed this model. While some have taken issue with prediction markets’ alleged similarities to gambling, others have been wary of the political aspect, arguing that it could undermine the integrity of democracy.