Is betting on football gambling? Prediction markets are battling to redefine wagers.

By Gordon Gottsegen

Kalshi and other prediction markets are booming because of sports betting. This is why they insist what's taking place on their platforms is not gambling.

The current NFL season has been a boon for Kalshi's growth.

When the Kansas City Chiefs play the Dallas Cowboys on Thanksgiving, people across America will be able to use Kalshi's prediction-market platform to bet on which football team will win. Kalshi is allowing its users to place their wagers on the Chiefs or Cowboys by buying an event contract built on a yes-or-no question. The contract trades on the platform like a stock and pays out if the user bets correctly.

Kalshi launched its sports contracts at the beginning of 2025, and business started booming in the late summer with the start of the professional football season. On the first Saturday of September, 96% of the $107 million in volume that changed hands on Kalshi came from sports contracts, according to data platform Dune. And since Kalshi's founding in 2018 through Nov. 19, some $12.5 billion of the volume on the platform has come from U.S.-based sports contracts - nearly 73% of its total $17.2 billion of volume, data from Dune show.

Kalshi gained popularity by allowing people to bet on the 2024 U.S. presidential election, and its "Who will win the Presidential Election?" prediction market is still the platform's single biggest volume generator, with $535 million traded. In recent weeks, Kalshi users also bet on how long the U.S. government shutdown would last, and the shifting odds were closely followed on Wall Street and in Washington, D.C.

But presidential elections happen once every four years, and there have only been five major federal government shutdowns since 1981, according to the Peter G. Peterson Foundation. On the other hand, dozens of sports contests take place every week across multiple professional and collegiate leagues.

Prediction markets provide useful insights that can be used by decision makers, including investors, executives and policy makers. They can supply a helpful gut check on what the general public thinks about a future event and may reflect the wisdom of crowds. But as prediction markets become more popular, the companies running them are leaning into something that many observers say looks less utilitarian and more like straight-up gambling. This move into sports by Kalshi and other prediction-market companies comes as the lines between gambling and investing are blurring, and as attitudes toward consumer protections shift amid an explosion of American sports betting promoted by tech companies and the big sports leagues.

Kalshi CEO Tarek Mansour has said that what takes place on his platform is not gambling. "I just don't really know what this has to do with gambling," Mansour said in an interview with Axios. "If we are gambling, then I think you're basically calling the entire financial market gambling."

Legal experts say that Mansour has a good business reason to distance Kalshi's sports-prediction markets from gambling. The company and its prediction markets are regulated on the federal level by the Commodity Futures Trading Commission. If Kalshi's sports contracts are deemed to be gambling, they say, the company could be subject to state laws and prohibitions, and those contracts could be removed from the regulation of federal commodities and futures markets under which the company currently operates.

"Of course it's gambling," said I. Nelson Rose, a professor emeritus at Whittier College who specializes in gambling law, about sports-event contracts. "The idea that it's a market doesn't make it any less gambling."

Kalshi generates revenue by charging transaction fees when contracts are traded on its platform. A private company, Kalshi announced in June that it had raised $185 million in equity funding, valuing the company at $2 billion. Just four months later, during the heart of football season in October, Kalshi announced it had raised another $300 million at a valuation of $5 billion, a 150% valuation increase in 107 days that coincided with the kickoff of America's most popular sport. Then in November, Kalshi reportedly raised another $1 billion in a funding round that valued the company at $11 billion - more than double its valuation from the previous month. Kalshi declined to comment on the November funding round.

"Kalshi has done $441 million of volume since NFL kickoff," Mansour posted on the social-media platform X in early September. "NFL week 1 is equal to a US election. Probably nothing."

"Sports represent an amazing growth vertical for Kalshi, which is expected, given the sheer amount of sporting events compared to major political or economic events," a Kalshi spokesperson told MarketWatch.

Competing prediction-market giant Polymarket is gearing up to re-enter the U.S. soon, and it's expected to primarily feature sports markets upon launch. Several of Polymarket's promotional ads focus on sports. Both Kalshi and Polymarket are official partners of the National Hockey League.

"Legal sports betting on the world's largest prediction market is coming to all 50 states," Polymarket Sports posted on X in early September.

Gambling or risk management?

Like countless Americans, Joey Shadeck grew up watching football on Sundays with his family. When he moved out of his childhood home, he kept up the tradition. Shadeck said he would play fantasy football with friends and bet on games from time to time.

"Every time you watch TV or listen to a podcast, there's just so much advertising [for sports betting]. It's kind of hard not to get into it," said Shadeck, who lives in Michigan and works as an online content strategist. "And once you start getting into it, it's fun and just kind of becomes a hobby."

As that hobby evolved for Shadeck, he started his own YouTube channel with tips and tricks for sports betting. He has tried some of the country's most prominent online sportsbooks, including DraftKings, FanDuel and BetMGM, which are currently available in Michigan and as many as 25 other states. He's also tried betting on Kalshi, which offers sports contracts nationwide. Shadeck said that Kalshi offers a similar, perhaps more basic experience compared with the other platforms, but he noticed that it has expanded to more closely resemble traditional sportsbooks, offering options like parlays and prop bets. Shadeck said it was hard for him to reframe sports contracts on prediction markets as something other than gambling.

"If you're 'predicting' who's going to win a football game, that's just a bet," Shadeck said. "The whole package, sure, you can make the argument that it's something different. But the sports? I mean, just because it says 'yes' or 'no' and there's a cent price instead of '-110 odds' - it's still gambling."

The American Gaming Association, a lobbying organization that represents brick-and-mortar casinos, sportsbooks and other entities in the traditional gambling industry, surveyed 2,025 registered voters in the U.S. to get their opinions on sports betting and sports-related prediction markets. The survey was conducted by YouGov, and the data was weighted to reflect the demographics of U.S. voters. The survey found that 85% of respondents considered sports-related prediction markets to be gambling and not financial instruments. And 84% of the respondents in that survey said that companies offering sports-related event contracts should be registered as sportsbooks in the states where they operate.

In its effort to protect its members from a tidal wave of sports-event contracts, the AGA's stance is that prediction-market companies are simply trying to avoid state regulation. "No matter the name, it's still sports betting," the AGA says on its website. "Prediction-market platforms are using sports-event contracts to evade state regulations and ignore the voice of voters and elected leaders at the state level."

The AGA declined to comment.

The people running the prediction-market platforms, meanwhile, say they have nothing to do with gambling. Popular retail brokerage Robinhood Markets Inc. (HOOD), which partners with Kalshi to offer sports-related event contracts on its investing app, says on an online support page that "Robinhood event contracts allow for speculation in prediction markets - these are not bets."

The Supreme Court legalized sports betting on the federal level in a landmark decision in 2018, leaving it up to state governments to decide both whether to allow sports gambling and how to regulate it. Numerous companies began offering online sports betting to customers following the decision, and state regulatory groups were formed to oversee their activities.

But Kalshi has a federal overseer, the CFTC, which regulates Kalshi as a designated contract market - an exchange able to list futures and other financial contracts that allow for hedging, managing risk or price discovery, legal experts say. Kalshi has long said it offers regulated event contracts, but if it is ever deemed to be facilitating gambling, it could legally be found to be operating outside the CFTC's purview and become subject to state laws, legal experts say.

Sports gambling is illegal in 11 states, including California and Texas, according to the AGA, and many other states put meaningful restrictions on sports betting. Most states that regulate sports betting, for example, set the minimum age at 21. But the minimum age set by the CFTC to trade futures contracts is 18, and Kalshi allows Americans age 18 and over to open accounts and trade on its sports-prediction markets.

"We are a federally regulated exchange under the exclusive jurisdiction of the CFTC; the law is clear on this front," a Kalshi spokesperson told MarketWatch. The spokesperson added that the company's sports contracts are different from sportsbooks because Kalshi is a financial exchange where people bet against other bettors, and not a platform where gamblers bet against the house.

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