Is Sports Betting Illegal In Your State? Not if you call it a ‘prediction market.’

Although online sports betting is illegal in Minnesota, Ian White continues to trade money on the outcomes of National Football League games. Mr. White, a special education paraprofessional, stated that he downloaded Kalshi, a “prediction market” app, after seeing an advertisement on TikTok. He buys contracts at $10 per game and has earned approximately $130.

“I do consider Kalshi betting,” he informed me, “but I love how they get around it by selling futures.”

Since Kalshi isn’t technically a sports gambling app like FanDuel or DraftKings, it can “get around” state gambling rules. Twenty states, including Minnesota, California, and Texas, have outlawed these types of online sportsbooks. Rather, Kalshi is an exchange that offers financial products based on the results of athletic events. It is currently accessible nationwide with the implicit consent of the Trump administration.

For instance, your experience on FanDuel and Kalshi would be strikingly similar if you were to bet $100 on the Dallas Cowboys winning this weekend.

ALSO READ: The CFTC claims that it has not yet decided on contracts for sporting events.

Does your state have laws against sports betting? If you refer to it as a “prediction market,” no. – The Times of New York
Compared to online sportsbooks, prediction markets are smaller, but they are expanding quickly. With the NFL season starting in September, Kalshi, the biggest sports contract marketplace, saw over $2.5 billion in trading activity. In September 2024, internet sportsbooks took in a total of $14 billion in wagers, according to the American Gaming Association.

In a recent Pew Research study, 43% of American people stated that legal sports betting is “a bad thing” for society, while 7% felt it was a positive thing. Kalshi’s foray into sports comes at a time when suspicion about legal gambling is growing. Politicians in states where sports gambling is allowed, licensed, and subject to taxes, as well as those where prediction markets are exempt from these laws, have also opposed Kalshi and other prediction markets.

Nevada Democrat Senator Catherine Cortez Masto stated, “What they’re doing is basically calling sports betting by another name, and that’s just wrong.”

Sportsbooks and prediction markets are essentially different, according to Kalshi. Sportsbooks keep their losses when gamblers wager against them; prediction markets allow users to trade contracts with one another and take a portion as a service charge. “Kalshi doesn’t win when our customers lose, which creates a fair, transparent environment for people to trade,” stated Tarek Mansour, the company’s CEO, in an email.

Prior to the Supreme Court overturning a federal ban and allowing states to enact their own laws in 2018, sports gambling was prohibited in the majority of states. Together, the 30 states that have legalized online sportsbooks generate billions of dollars in tax income.

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