Fish On A Heater
Last week may have been the proverbial turning point for Kalshi, as the company went from getting hit in the face with the deck to getting an ice cold run of cards.
The Bulletin Board
THE LEDE: A not-so-great week on several fronts for Kalshi.
BEYOND the HEADLINE: You can’t have it both ways.
ROUNDUP: GeoComply data on impact of C&Ds; ESPN Bet announces refund policy; Kero Sports announcements.
VIEWS: Jason Robins talks prediction markets at the BoA conference.
AROUND the WATERCOOLER: Unusual circumstances lead to uncertainty.
STRAY THOUGHTS: It’s time for the feats of strength.
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The Lede: A Not-So-Good-News Week for Kalshi
While it’s the most controversial topic in the industry (which is saying something in 2025), Kalshi scored a number of early victories, but that winning momentum is subsiding, raising the question of whether Kalshi was, in poker parlance, just a fish on a heater.
The court cases against Kalshi are moving forward, and unlike temporary restraining orders, this is where the rubber meets the road. Further, as Kalshi dives deeper and deeper into sports markets, the competition is popping its head above deck, as is the next generation of envelope-pushers.
Competition Has Arrived
Like Kramer in the East River, Kalshi has been enjoying swimming alone in the prediction market pool. But the word is out, and the pool is getting full.
FanDuel’s partnership with CME doesn’t offer sports markets, but those can be turned on at a moment’s notice. STTP story here.
Polymarket is set to return to the US, following a no-action letter from the Commodity Futures Trading Commission (CFTC). STTP story here.
Underdog (a newsletter sponsor) has entered into an agreement with Crypto.com. STTP story here.
The return of PredictIt (although not initially with sports contracts), which saw its parent company, Aristotle, approved as a designated contract market (DCM) and derivatives clearing organization (DCO) by the CFTC last week. This comes on the heels of the company receiving a less-restrictive no-action letter in July — Straight to the Point has been following PredictIt’s battles with the CFTC since 2023, long before Kalshi.
Verse Gaming has shifted from a DFS platform to offering parlay prediction markets via a sweepstakes model — because prediction markets and sweepstakes weren’t controversial enough on their own, this just further pushes the envelope. Story here.
Tribal Lawsuit in California
A trio of California tribes (the Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians) is seeking an “immediate preliminary injunction against Kalshi and Robinhood to prevent them from offering sports wagering event contracts on Indian lands,” per attorney Daniel Wallach.
If granted (and that’s a big if, according to attorney Andrew Kim), it could cause Kalshi massive headaches in other tribal gaming states and severely undercut its arguments about the cost and difficulty of geofencing jurisdictions.
There will be more on California in tomorrow’s newsletter.
Discovery in Nevada
As Andrew Kim noted on X, Kalshi’s motion to stay discovery in Nevada was denied by Magistrate Judge Brenda Weksler.
Nevada requested that Kalshi provide all communications regarding event contracts with the Commodity Futures Trading Commission (CFTC), the federal government, and CFTC Chair nominee Brian Quintenz in a mid-August discovery request. The state also asked for information about market makers.
Kalshi called the request “utterly irrelevant” and a distraction.
As Kim summarized, Judge Weksler disagreed, ruling she “doesn't think that Nevada needs to accept Kalshi at its word that its contracts have economic consequences,” or its “assertion that there's a conflict between state gaming laws and CFTC requirements—Judge Weksler thinks that Nevada should be able to probe that issue, too.”
And just to pour a little salt into the wound, “Judge Weksler also ruled that Nevada can test Kalshi's assertions of reputational harm, the costs associated with geolocation (hello, GeoComply!), and what the consequences might be if Kalshi were forced to follow state gaming requirements (thereby failing to follow CFTC rules).”
As I said on X, if Kalshi is forced to disclose what Nevada is asking for, discovery will be a popcorn-level event that will put the lunacy of the past 12 months to shame.
New Jersey Court Panel Selected
This isn’t necessarily bad news for Kalshi, but as Andrew Kim notes, it’s not a slam dunk either: “The panel for next week's Third Circuit argument in Kalshi v. New Jersey will be Chief Judge Chagares, Judge David Porter, and Senior Judge Jane Roth.”
Beyond the Headline: Kalshi’s Bold Marketing Strategies
For a company that says, ‘well, actually, we’re not sports betting,’ Kalshi certainly seems okay with the term (and adjacent terms like props, which is short for proposition betting) being attached to its offerings in marketing materials.
And the use of “betting” is not limited to Kalshi:
So, why are they so comfortable calling it sports betting (while arguing that it’s technically not betting in court)? Like all of us, they know what it is, and they know the general public’s ears won’t perk up when they hear or see an ad about sports contracts.
And in other Kalshi marketing news, the company has also been using NFL and college logos in its ads, and for some inexplicable reason, rugby fields.
As Gouker later noted, the rugby fields disappeared, but the logos did not:
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Roundup: GeoComply Data; ESPN Bet Refund Policy; Kero Sports Announcements
GeoComply data on states that have issued cease-and-desist orders [Press Release]: According to a new report from GeoComply, state crackdowns on illegal/unregulated online gambling are having a significant impact. Per the report, a sampling of states (Arizona, Louisiana, Massachusetts, Michigan, and Tennessee) that have issued cease-and-desist letters to illegal offshore sites and sweepstakes sites have seen a 10% year-over-year increase in active players and a 38% increase in new accounts compared to select states that haven’t taken action (Iowa, Indiana, Kentucky, North Carolina, and Virginia).
Kero Sports NFL micro-betting markets are live at Caesars Sportsbook [LinkedIn]: Kero Sports Founder and CEO wrote on LinkedIn, “I’ve always heard how important football season is. I knew, in theory, how important football season is. But nothing quite prepares you for the pressure of getting your product ready to go live on US soil during the NFL kickoff. Last night, we powered an exhaustive roster of real-time markets across one of the biggest sportsbooks in the country. Huge feeling of pride in our team and a massive shoutout to all of our partners’ teams who helped shape this, one snap at a time.” STTP Thoughts: The launch comes amid calls to limit micro-betting in New Jersey and Ohio. In unrelated Kero news (via a press release), it announced the addition of Chris Grove to its board of directors and deals with Bet99 in Canada and BetSaracen in Arkansas.
ESPN Bet is the latest operator to add an injury refund policy [Covers.com]: ESPN Bet has announced an injury refund policy, similar to the policies instituted at Fanatics, DraftKings, and FanDuel. “This football season, ESPN BET is introducing injury insurance for all NFL games,” ESPN BET said via a release. “If a key player gets injured in the first half and is ruled out for the remainder of the game, pre-game prop bets involving that player will be refunded as bonus bets, and parlay legs will be voided and odds for the remaining legs automatically recalculated.”
Views: Jason Robins Makes News at BoA Conference
DraftKings CEO Jason Robins made headlines during the Bank of America Securities 2025 Gaming & Lodging Conference last week, when he said the prediction market opportunity was too big for traditional sports betting operators to ignore, given the current legislative landscape, with Robins saying:
“I think the TAM opportunity is likely to be very significant in states that do not have legal online sports betting. And I think it is likely to be fairly small in states that do have online sports betting.”
As Robins noted, when both are available, like in the UK, “customers overwhelmingly prefer the traditional online sports betting product.” However, Robins also said that when no legal options exist, prediction markets are a solid alternative.
What caught the attention of Sports Betting Twitter was the rationale, with Robins noting that the inability to limit bettors will prevent prediction markets from offering the same catalog of wagers:
“It's going to be very difficult to ever have as full-featured an offering in a prediction market setup as you could in an online sportsbook. One of the chief reasons being risk management, when you are putting as a market maker, a market up on an exchange, you just have to be comfortable with anyone taking that liquidity.
“Anyone can fill that order versus we are able to place limits on Sharps and other people. And that is the only reason we're able to offer the variety of bets and things that we can. If we offered all the different bets that we offered, and we weren't able to do that, we would get picked off and destroyed, right?
“So I think that is going to be a limiting factor for not just the variety of bets, but parlays and other sorts of combinability and things like that.”
This is a question I raised during my podcast with Dustin Gouker, where I brought up several potential pitfalls prediction markets will face: How do you prevent sharps from eating your lines alive?
Other notable quotes from Robins:
On AI displacing humans: “We are going to be hiring more AI engineers. We are deploying some new tools. But the amount of efficiency, I think we are going to generate on headcount and being able to basically replace what would have been human hires with AI agents, and also reduce in certain areas as well. I think over the next few years is going to be a big thing for us. So that's something we're very focused on in terms of the cost side.”
On tax increases: “I don't think there are many, if any, states left that are strong candidates for just outrageously high tax rates like what we have in New York or Illinois. So that's the good news. I think a lot of that's been exhausted. And I think that more likely than not, the next focus will be iGaming for new sources of revenue in some of those states.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
Context matters, and to say things are a little unusual at the federal commissions that have oversight of prediction markets and crypto is putting it mildly:
Stray Thoughts
Is there anything more impressive than a feat of strength?
As cool as someone taking human capabilities to new levels in sprinting or jumping events, there is something about a superhuman deadlift that just blows my mind:
Someone pulling half that weight (550 lbs) in a gym would turn heads (if I had to guess, and I have some extensive experience here, 1-in-500 men can deadlift 500 lbs.), and Thor made that pull look easy. My best deadlift was 445 lbs at 189 lbs, but that was many moons ago.