CFTC regulates us, won’t stop until they ask us to: Kalshi co-founder

April 7, 2025

CFTC regulates us, won’t stop until they ask us to: Kalshi co-founder

Kalshi co-founder and CEO Tarek Mansour says his company is pressing forward with sports-outcome prediction markets in all 50 U.S. states — despite cease-and-desist letters from five of them and a looming federal proposal that could bar such contracts entirely.

In an interview with TechCrunch on Friday, Mansour shrugged off the state orders, saying: “We are literally like a financial exchange, but the underlying trading is events. The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”

Kalshi received cease-and-desist letters from Nevada, New Jersey, Ohio, Illinois, and Montana. The states claim that Kalshi’s contracts — which allow users to trade on outcomes like Super Bowl results or political elections — violate local gambling laws and require a sports betting license to operate.

Mansour disagrees. He insists Kalshi falls under exclusive federal jurisdiction as a CFTC-regulated exchange, similar to commodity markets. “The state law doesn’t really apply when you’re a federally regulated exchange,” he said, comparing Kalshi’s situation to grain futures being traded legally in Kansas despite a state-level ban.

Casino lobbying allegations

Mansour claims state regulators are acting under pressure from the casino industry. “The reason why states are sending us these cease-and-desists is because there are massive casino lobbyists not happy about this,” he said.

Kalshi has taken legal action against Nevada and New Jersey in response to the enforcement letters, arguing they interfere with its federally authorised operations. Mansour also criticised the Nevada Gaming Control Board for publicly releasing its letter before the company had formally received it. “(Kalshi) had to call four times to see if they were going to send it,” he said. “Legally, you cannot receive a cease-and-desist on Twitter.”

CFTC proposal threatens entire market

Meanwhile, Kalshi faces a broader regulatory threat at the federal level. The Commodity Futures Trading Commission has proposed a rule that would prohibit contracts based on certain event types—specifically, sports and elections—if those contracts are deemed “contrary to the public interest.”

While the CFTC has long exercised informal discretion in approving or rejecting such contracts, the proposed rule would codify a policy that could effectively shut down Kalshi’s sports and political markets, even if the company complies with federal exchange rules.

The agency is currently accepting public comments on the proposed ban, with observers watching closely to see whether the CFTC will formally categorise sports outcome trading as a form of gambling.

Betting or hedging?

Kalshi argues that its contracts serve a legitimate financial purpose — namely, discovering prices and helping people manage real-world risks. “It has an economic utility behind the speculative activity, and that’s what makes it a financial instrument and not a gambling instrument,” Mansour told TechCrunch.

The company made a high-profile entry into the sports prediction space earlier this year, launching markets around Super Bowl LIX and expanding during the NCAA March Madness tournament. According to the TechCrunch report, more than $200 million in contracts were traded during the tournament’s opening weekend alone.

Kalshi also distributes its products via Robinhood, which has itself received cease-and-desist letters from state regulators for offering access to these markets.

Regulatory grey area

The legal status of Kalshi’s contracts remains in flux. The CFTC previously denied Kalshi’s request to offer 2024 election markets, but a court ruling allowed the company to move forward with certain types of event-based contracts. Kalshi’s position is that it operates within its legal rights under the Commodity Exchange Act — but that view is not shared by all state authorities.

“There hasn’t been a single financial derivative set up in the U.S. or otherwise that hasn’t been called gambling at the beginning,” Mansour said. “It’s consistently the same thing.”