CFTC Drops Enforcement Case Against Kalshi Sports Markets
The CFTC ended its legal challenge to Kalshi's sports event contracts, confirming Kalshi can offer sports outcomes as regulated event contracts under its DCM licence. A landmark ruling for regulated prediction markets.
The US Commodity Futures Trading Commission (CFTC) formally dropped its enforcement action against Kalshi's sports event contracts in May 2025, ending a legal dispute that began when the agency challenged whether sports outcome contracts were permissible under Kalshi's Designated Contract Market licence.
Kalshi had launched sports contracts in late 2024, arguing that the CFTC's own self-certifying process for DCM products permitted the markets under its existing licence. The agency disagreed and sought to block the sports contracts, setting up a court battle. Kalshi prevailed at the district court level, and the CFTC subsequently withdrew its appeal in May 2025.
The ruling has industry-wide implications. It confirmed that a fully CFTC-regulated exchange can offer sports outcome event contracts, opening a legal pathway for other CFTC-licensed entities (like Robinhood's future exchange and Novig's pending DCM application) to list similar products. It also reinforced that the DCM self-certification process, not CFTC pre-approval, governs what products a licensed exchange can list.
For US sports bettors, the practical impact was immediate: Kalshi expanded its sports coverage to include more leagues, more contract types, and eventually NFL parlays in partnership with Robinhood. Sports contracts are currently available in 35+ US states, with New Jersey a notable exception due to the state's own regulatory position on federally-licensed event contracts.
Operators mentioned in this article
Recent updates
IG Group Buys Underdog for $1.3 Billion — The First Major Foreign Acquisition of a US Prediction Market Exchange
IG Group, the UK-listed financial trading platform, has agreed to acquire Underdog for approximately $1.3 billion — 13 days after Underdog launched its own CFTC-licensed exchange. The deal gives IG Group a US designated contract market and derivatives clearing organization, making it the first international financial firm to acquire a licensed US prediction market venue. Underdog is currently the third-largest US prediction market by regulated notional volume, behind Kalshi and Robinhood.
An Independent Integrity Body Found 7 Betting Irregularities at the World Cup. FIFA Said There Were None. The Clash Centers on Polymarket.
The Group of Copenhagen — the Council of Europe's independent match manipulation watchdog — raised seven yellow notices for potential betting irregularities during the 2026 World Cup, in direct contradiction to FIFA's own Integrity Task Force, which published an all-clear on Tuesday. The most troubling finding involves Polymarket: the platform opened a market on July 2 asking whether Folarin Balogun would play against Belgium — the same day Balogun received a red card and three days before FIFA publicly confirmed his ban was suspended. No equivalent markets were opened for any of the other 14 red cards shown at the tournament.
After Yesterday's Hearing, Congress Looks Ready to Legislate on Prediction Markets — Not Just Watch
The House Agriculture Subcommittee held a two-hour hearing on July 22 examining sports event contracts, with witnesses from the American Gaming Association, tribal gaming, and both sides of the CFTC authority debate. Subcommittee Chair Dusty Johnson said Congress 'cannot afford to be silent' and signaled there is 'work for them to do.' Witnesses urged members to advance H.R. 7840, the Event Contract Enforcement Act, which would ban sports event contracts outright. The hearing adds a third front to a fight that is already being waged simultaneously in ten state courts and at the CFTC.