Headline: Kalshi’s crypto push sparks billion-dollar showdown with U.S. gaming lobby — and could end up at the Supreme Court
Kalshi’s rapid move into crypto-linked perpetuals has lit a fire under the U.S. gaming industry and reignited a high-stakes fight over who should regulate betting-style contracts sold on prediction markets.
What happened
- A coalition that includes the Indian Gaming Association, the American Gaming Association and several labor groups has asked the U.S. Senate to add language to the CLARITY Act explicitly banning prediction-market platforms from offering sports- and casino-style event contracts.
- The groups argue that such products should remain under state and tribal gaming regulators — not the Commodity Futures Trading Commission (CFTC) — and say prediction markets have produced “the largest expansion of gambling in U.S. history” over the past 18 months.
- The American Gaming Association estimates states have lost about $1.08 billion in tax revenue since prediction markets began offering sports-related contracts.
Why Kalshi is at the center of this
- Kalshi, originally a prediction market platform, has expanded aggressively into crypto derivatives. It reported more than $5.5 billion in trading volume across its new perpetual futures within two weeks of launch.
- The company currently lists 11 crypto-linked perpetual contracts and has secured approval for a Bitcoin perpetual (BTCPERP, approved May 29) and subsequently rolled out XRP and Solana perpetuals. Several other filings — including Dogecoin, Shiba Inu, Stellar, Hedera and Hyperliquid’s HYPE token — are progressing through regulatory review.
- Perpetual futures let traders hold positions without expiry while using funding payments to tie contract prices to spot markets. That structure enables continuous trading but also introduces leverage risks during volatile moves.
The regulatory flashpoint
- The dispute centers on the CFTC’s view — under Chair Michael Selig — that event contracts sold on prediction markets can qualify as swaps and thus fall under federal commodities regulation. The CFTC has backed platforms such as Kalshi and Polymarket in disputes with state gaming regulators.
- Opponents counter that the CFTC was created to oversee commodities and derivatives, not sports wagering, and argue it lacks the operational framework and local expertise to regulate nationwide sports betting where states and tribes already exercise authority.
Political and legal stakes
- The CLARITY Act, designed to shift some crypto regulation from the SEC to the CFTC, passed the House in July 2025 but still faces negotiation in the Senate over stablecoin yield products, ethics provisions and tokenized equities. The gaming coalition wants the bill to explicitly carve out sports and casino-style contracts from prediction markets.
- Legal observers cited in reporting say the dispute could ultimately reach the U.S. Supreme Court, hinging on interpretations of Murphy v. NCAA (2018), which affirmed states’ authority over sports gambling. Kalshi, Polymarket and the CFTC maintain that their event contracts are swaps subject to federal oversight — a competing interpretation that could force a high-court decision.
Why crypto traders should care
- If Congress or the courts limit prediction markets’ ability to offer sports or casino-style contracts, platforms may face product rollbacks or regional restrictions, affecting liquidity and product availability.
- Conversely, a federal regulatory win for the CFTC could clear the way for broader derivatives innovation — including more crypto perpetuals — but raise fresh compliance and tax questions for platforms and traders alike.
Bottom line
Kalshi’s expansion into perpetual crypto contracts has escalated into a billion-dollar policy battle between federal regulators and the traditional gaming industry. With CLARITY Act negotiations ongoing and potential litigation ahead, the outcome will shape how — and under whose rules — crypto-derivative and prediction-market products evolve in the U.S. market.
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