Kalshi users aged 18 to 21 have traded an estimated $3.9 billion on sports-related contracts this year, according to an analysis by CNN reported by fortune.com. This trading activity exposes a regulatory loophole, as sports gambling is generally restricted to those 21 and older in most states. Kalshi operates as a financial market regulated by the Commodity Futures Trading Commission, allowing users 18 and above to participate.
The platform enables users to buy event contracts with yes-or-no outcomes based on real-world events, including sports games and championships. Kalshi matches users taking opposite positions and pays out only to those who correctly predict outcomes. A Kalshi spokesperson told CNN that users aged 18 to 21 represent just 3.14% of the platform's overall trading volume. Meanwhile, New York State has filed a lawsuit seeking to shut down Kalshi, alleging it operates an unlicensed gambling platform.
This situation highlights the tension between federal regulation of prediction markets and state-level gambling laws. Kalshi’s classification as a financial market under the Commodity Futures Trading Commission allows it to circumvent state restrictions on sports betting age limits. The platform’s $3.9 billion sports trading volume by under-21 users contrasts with traditional sports gambling operators, which must comply with state age restrictions. This case may influence future regulatory approaches to prediction markets and sports betting.
New York State’s lawsuit against Kalshi is ongoing, with the state aiming to halt the platform’s operations. Kalshi has not issued a public response to the lawsuit, and the outcome could set a precedent for how prediction markets are regulated in relation to state gambling laws.