Kalshi, a prediction markets platform regulated by the Commodity Futures Trading Commission, is simultaneously fighting roughly twenty states that are trying to classify its sports-event contracts as illegal gambling. Federal appeals courts are split on the issue: the Third Circuit sided with Kalshi on federal preemption, while the Ninth and Sixth Circuits upheld states’ authority to enforce their gambling rules. By late August 2026, at least four states (Nevada, Massachusetts, Michigan, and Washington) had secured court orders restricting Kalshi’s activities. Sports contracts, which represented 95% of the company’s revenue in 2025, had fallen to roughly two-thirds by mid-2026, directly reflecting the shifting legal environment. Coinbase is supporting Kalshi in some of its challenges, signaling that the outcome could affect the broader crypto sector.
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