An ad for the prediction market app Kalshi was seen on a mobile phone on April 16, 2026, in Chicago. This photo, taken by Erin Hooley, underscores Kalshi’s current surge.
Kalshi has significantly benefited from the FIFA World Cup. Since the tournament began, Kalshi claims new records, with over $25 billion in bets. In contrast, online sportsbooks like DraftKings and FanDuel anticipate $4 billion in wagers across all matches. This discrepancy raises skepticism from sportsbook proponents about Kalshi’s claim of not being a gambling app.
Sportsbooks argue that Kalshi and similar prediction market operators exploit a legal loophole, growing without paying state gaming taxes. Also, Kalshi accepts users as young as 18, reduced from the standard 21, and operates where sports bets are otherwise prohibited, such as California and Texas. This operates under the Trump administration’s support of Kalshi as a financial product rather than a betting site.
Understanding Kalshi’s Model
Kalshi users bet against each other, unlike traditional sportsbooks where bets are against the house. Kalshi profits through transaction fees instead of bettors’ losses. The platform also permits gambling on various global events. Kalshi’s spokesperson, Elisabeth Diana, states that unlike sportsbooks, it does not limit bets or ban frequent winners, making the platform fairer.
Presently, Kalshi faces over 20 federal lawsuits about whether it can be classified as a finance app or a sportsbook. This distinction influences billions in tax revenue and the prediction market’s growth.
The Betting Experience
Despite Kalshi’s differences, some experts highlight its similarities with sportsbooks. Economist Victor Matheson notes that both serve similar purposes and should potentially face similar regulations and taxes. Kalshi campaigns to draw users from traditional sports betting through digital advertisements, portraying sportsbooks as predatory.
Though its ads have been removed following inquiries, Kalshi remains prominent, with sports bets accounting for 80 to 90% of its volume. Popular bets include team outcomes, parlay bets, and numerous game-related events.
Industry Reactions and Predictions
The American Gaming Association’s David Forman views Kalshi as primarily a sportsbook with a minimal prediction market. The platform appeals to users in states where betting is illegal or restricted, attracting new funds. Meanwhile, DraftKings and FanDuel expand into prediction markets, ensuring their participation in markets like Texas.
While there’s no significant hit to sportsbook profits from Kalshi, the ongoing expansion of prediction markets poses a potential threat. Sportsbooks profit from bettors’ losses, while prediction markets grow through increased participation.
Tax Implications and Legal Battles
Investors in DraftKings and FanDuel express concerns over taxes. Sportsbooks pay state taxes on gross gaming revenue. Kalshi’s tax model contrasts sharply, with prediction markets avoiding billions in taxes annually. States use sportsbook taxes to fund public services. Kalshi’s state litigation often highlights its tax evasion as a central issue. Some states, like North Carolina, established prediction market taxes, potentially setting a precedent.
Kalshi’s compliance with corporate tax laws is cited as it advocates responsible state taxation, under its federal regulation status.
Legal and Political Challenges
Not all states agree with Kalshi’s claims. Minnesota bans prediction markets outright, while Massachusetts and Michigan courts restrict its use for betting. Arizona has filed charges against Kalshi, with a federal court temporarily halting them. Some predict these legal conflicts may land in the Supreme Court, which could redefine Kalshi’s legal status.
Kalshi highlights its federal regulation, complying with all laws, and stands by its legal stance. Meanwhile, the Commodity Futures Trading Commission under Trump supports prediction markets, challenging state attempts at regulation. Donald Trump Jr., owning shares in prediction markets, adds another dimension to the debate.
Economist Matheson emphasizes the potential changes should political control shift. He insists that prediction markets resemble illegal sportsbooks, suggesting that under new administrations, regulations could change dramatically.