"If the answer includes state gaming regulators, it's game over for you as a prediction market operator, because you don't have the 50-state flexibility and the lack of regulatory friction that you would if you were just to answer to the CFTC." ~ Andrew Kim
In this episode of The Talking Shop Podcast, Andrew Kim, a partner at Goodwin specializing in appellate litigation and gaming law, discusses the legal battles surrounding Kalshi.
Kim explains the tension between Kalshi’s claim that, as a federally regulated designated contract market, its sports contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) and state regulators, who view its offerings as sports betting.
This has led to lawsuits in Nevada and New Jersey (and, subsequently, Maryland), where Kalshi argues that federal preemption should override state gaming laws.
As Kim explains, the core issue is whether Kalshi answers solely to the CFTC or also to state regulators, a question that could determine the platform’s future.
We also touch on:
Concerns about responsible gaming, with Kim noting that CFTC regulations may not adequately address gambling addiction risks compared to state frameworks.
The broader implications for prediction markets, including potential CFTC rule changes and the political dynamics that could influence outcomes.
Whether the CFTC might limit contracts to significant (tentpole) events.
If state oversight could stifle the industry.
You can find Andrew on LinkedIn here.
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