Kalshi starts a multi-billion dollar conflict with the US gaming industry

Kalshi has fueled a multibillion-dollar dispute over the regulation of sports betting as social media trading continues to boom.

According to a report from Semafor, a coalition that includes the Indian Gaming Association, the American Gaming Association, and labor unions has urged the US Senate to add language to the CLARITY Act that expressly prohibits contracts for sporting and casino-style events from being offered through betting market platforms.

In a letter to lawmakers, the groups argued that sports betting should remain outside the jurisdiction of the Commodity Futures Trading Commission and continue to be regulated by existing federal and state regulatory systems.

The coalition said the betting markets had done what it described as the biggest increase in gambling in US history over the past 18 months without specific regulatory approval.

The dispute arises as Kalshi continues to grow beyond its predicted market business.

Earlier this week, the company disclosed that its perpetual futures products generated more than $5.5 billion in trading volume within two weeks of launch. The platform currently offers permanent futures contracts linked to crypto and is discussing additional products with regulators.

Gaming teams are challenging the organization’s oversight of sports contracts

Pressure from gaming organizations has centered on the CFTC’s position that speculation markets fall under federal commodities law. Under Chairman Michael Selig, the agency has supported platforms such as Kalshi and Polymarket in legal disputes involving state gaming regulators.

In their letter, the organizations argued that the CFTC was created to oversee commodity markets and derivatives rather than sports betting. They argued that the agency lacked the operational framework and expertise needed to regulate sports betting nationwide, especially in areas where federal and state authorities already oversee.

Financial concerns have also become part of the debate. Data cited by the American Gaming Association estimates that state sports authorities have lost about $1.08 billion in tax revenue since betting markets began offering contracts for sports-related events.

Meanwhile, lawmakers continue to negotiate the final form of the CLARITY Act, legislation designed to transfer parts of the digital asset regulatory authority from the Securities and Exchange Commission to the CFTC. Although the bill passed the House of Representatives in July 2025, discussions on stablecoin yield products, ethical provisions, and token allocations delayed final approval.

Kalshi expands crypto derivatives despite legal uncertainty

As the political battle raged, Kalshi continued to add products tied to digital assets. Following the regulatory approval of its BTCPERP contract on May 29, the company launched CFTC-approved Bitcoin perpetual futures in the United States and later expanded into XRP and Solana contracts.

The contracts allow traders to maintain positions without expiration dates while using financial payments designed to keep prices in line with local markets. Although the structure can support continuous trading activity, the power may increase losses during periods of sharp market volatility.

Additional listings including Dogecoin, Shiba Inu, Stellar, Hedera, and Hyperliquid’s HYPE token have also advanced through regulatory review processes, indicating that Kalshi’s crypto lineup may continue to grow.

Legal observers cited in the Semafor report believe that the conflict between federal and state regulators could eventually reach the US Supreme Court.

The possibility stems from competing interpretations of the court’s 2018 Murphy v. The National Collegiate Athletic Association, which has given states jurisdiction over sports betting, while Kalshi, Polymarket, and the CFTC maintain that event contracts offered on prediction market platforms qualify as swaps under state regulation.