What does it look like when a startup decides to challenge both a federal regulator and nearly every state gaming authority in America — all at the same time? The answer is the Kalshi lawsuit story, a legal saga that many industry observers consider the most consequential regulatory fight unfolding in American financial markets today.
Kalshi, a New York-based prediction market platform co-founded by Tarek Mansour, now sits at the epicenter of a fast-growing legal conflict. A dispute that originally involved a single court case against the Commodity Futures Trading Commission (CFTC) over election contracts has since grown into nearly 20 simultaneous federal lawsuits spanning multiple states. The final outcome could fundamentally alter the rules governing how Americans are permitted to wager on sports, political events, and other real-world outcomes.
This article breaks down exactly what the Kalshi lawsuit involves, who Kalshi founder Tarek Mansour is, how Kalshi stacks up against rival platform Polymarket, and what the continuing legal battles mean for regular users — including whether a Kalshi promo code makes practical sense given the current climate of uncertainty.
What Is Kalshi and Why Is It Being Sued?
Kalshi is a federally regulated prediction market platform — in plain terms, an exchange where users buy and sell contracts that pay out based on the outcomes of future events. Picture a traditional stock market, but instead of purchasing shares in a company, you are trading contracts tied to whether the Federal Reserve raises interest rates, which political party wins a congressional race, or whether a particular sports team finishes the season on top.
The company was established in 2018 and obtained its Designated Contract Market (DCM) license from the CFTC in November 2020. That license places Kalshi in the same regulatory tier as the Chicago Mercantile Exchange (CME) — a significant distinction. It also sits at the core of every Kalshi lawsuit: the company’s central legal argument is that holding a federal license means individual states have no authority to impose additional requirements on its operations.
State regulators strongly disagree. Gaming authorities in Nevada, New Jersey, Maryland, Massachusetts, Connecticut, and several other states have issued cease-and-desist orders, contending that Kalshi is running an unlicensed sports betting operation that bypasses the consumer protections built into state gambling laws. A Connecticut official captured the disagreement in blunt terms, stating that placing a wager on a prediction market is not the same thing as making a financial investment.
The Original Kalshi Lawsuit: Taking on the CFTC Over Election Betting
Well before the current round of state-level conflicts, Kalshi fought — and ultimately prevailed in — a landmark case against its own federal regulator. Understanding that earlier battle is essential context for everything that followed.
The Congressional Control Contracts Dispute
In approximately 2022, Kalshi formally requested permission to list what the company called Congressional Control Contracts — essentially, financial instruments that would allow users to trade on which political party would control the House or Senate following the 2024 elections. The CFTC rejected the request, concluding that the contracts amounted to election gambling, an activity prohibited in many states, and that they ran contrary to the broader public interest.
Kalshi responded by filing a lawsuit under the Administrative Procedure Act, asserting that the CFTC had acted arbitrarily and had exceeded its statutory authority. In September 2024, the U.S. District Court for the District of Columbia ruled in Kalshi’s favor. The court’s decision turned on a single word: “gaming.” Because the Commodity Exchange Act (CEA) does not provide a definition of gaming, the court consulted standard dictionary sources and determined that elections do not fall within the same category as poker or slot machine gambling.
The CFTC then appealed to the D.C. Circuit Court, which heard oral arguments in January 2025. Shortly afterward, in May 2025, the agency — operating under the newly installed Trump administration and a new CFTC chair — withdrew its appeal altogether. Kalshi had secured a definitive legal victory and immediately began planning its next move.
The Expansion into Sports Betting — and the Legal Fallout
Encouraged by the outcome in its CFTC case, Kalshi self-certified sports event contracts and launched them on January 24, 2025. The platform’s growth was dramatic: by early 2025, sports-related trading accounted for more than 90 percent of all activity on the platform — a remarkable shift from the company’s origins as a niche financial hedging tool. Weekly trading volumes reached into the billions of dollars, and Kalshi secured high-profile media partnerships with CNN and CNBC.
State regulators wasted no time responding. Cease-and-desist orders arrived from multiple directions. Kalshi countered by filing lawsuits in federal courts throughout the country, arguing that federal preemption under the CEA strips states of any jurisdiction over its contracts. By early 2026, Kalshi was actively managing roughly 19 federal lawsuits simultaneously.
Where the Kalshi Lawsuits Currently Stand
The judicial results across the country have been decidedly uneven. Below is a state-by-state overview of how courts have ruled in the ongoing Kalshi legal battles.
Nevada and New Jersey: Initial Wins for Kalshi
Nevada was the first significant arena. In April 2025, a federal district judge granted Kalshi a preliminary injunction, holding that the exclusive jurisdiction language in the CEA demonstrated that Congress intended to regulate all DCM transactions at the federal level — thereby overriding Nevada’s gaming statutes. A New Jersey federal court reached the same conclusion later that month, with the presiding judge stating directly that Kalshi’s sports contracts fall within the CFTC’s exclusive domain. Both states subsequently filed appeals, which are currently pending before the Ninth and Third Circuit Courts of Appeals, respectively.
Important Update: The Nevada district court later reversed course and dissolved its own preliminary injunction upon reconsidering the merits of the case — a meaningful setback for Kalshi in a jurisdiction it had initially appeared to win.
Maryland and Massachusetts: Courts Rule Against Kalshi
Maryland’s federal district court reached a different conclusion, denying Kalshi a preliminary injunction in August 2025. That court found that Congress had not clearly intended to displace state gambling authority, and that Kalshi could, in theory, satisfy both federal requirements and state regulations at the same time. Kalshi has since appealed the ruling to the Fourth Circuit.
Massachusetts moved even more aggressively. The state’s attorney general filed suit against Kalshi in state court in September 2025. Then, in January 2026, a Suffolk County Superior Court judge issued a preliminary injunction prohibiting Kalshi from allowing Massachusetts residents to place sports wagers without first obtaining a state license — a direct challenge to the platform’s ability to operate freely in that state.
Connecticut and the Class Action Lawsuit
In December 2025, Kalshi initiated legal proceedings in Connecticut after receiving a cease-and-desist order from the state’s Department of Consumer Protection. Connecticut regulators maintained that Kalshi was operating an unlicensed sports wagering platform without adequate consumer safeguards or integrity controls. Kalshi argued in response that being required to block Connecticut users from its platform would cause immediate and irreparable harm to its business.
In a separate development, a proposed class action lawsuit was filed against Kalshi in New York State in November 2025. The complaint alleges that Kalshi engaged in deceptive conduct by misleading users into believing they were wagering against other platform participants, when in reality they were trading against Kalshi itself — or its affiliated partners. Kalshi co-founder Luana Lopes Lara publicly dismissed the lawsuit as entirely without merit.
Kalshi Founder Tarek Mansour: The Person Behind the Legal Fight
To make sense of why Kalshi pursues its legal battles with such persistence, it is worth understanding the founder behind the company’s strategy. Tarek Mansour does not fit the typical profile of a technology entrepreneur. He comes from a background in structured credit at Goldman Sachs and global macro trading at Citadel — two environments that trained him to identify inefficiencies in large, complex systems and build strategies around them.
Raised in Lebanon after being born in California, Mansour came back to the United States to attend MIT, where he completed bachelor’s degrees in both computer science and mathematics, along with a Master of Engineering degree, by 2018. It was his experience on trading desks that clarified the founding thesis for Kalshi: major financial institutions were already spending enormous capital on intricate derivative products that were, in effect, simply indirect bets on real-world events like Brexit or election outcomes. Mansour believed there was a more direct and transparent way to build that market.
In 2018, he joined forces with his MIT classmate Luana Lopes Lara, a former analyst at Bridgewater and Citadel who had grown up in Brazil, to co-found Kalshi. The two entered Y Combinator in 2019 and spent several years working through the CFTC’s registration requirements before the platform became publicly available in 2021.
By December 2025, Mansour — then only 29 years old — had become a billionaire after Kalshi completed a $1 billion funding round that set the company’s valuation at $11 billion. Analysts estimate his personal net worth at approximately $1.3 billion, reflecting roughly a 12 percent ownership stake. His publicly stated ambition is to “financialize everything” — meaning he wants to create a regulated marketplace where any disagreement about what the future holds can become a tradeable financial position.
Kalshi vs. Polymarket: Two Major Platforms, Two Very Different Models
Whenever prediction markets come up in conversation in the United States, two platforms tend to dominate the discussion: Kalshi and Polymarket. Yet despite operating in the same general space, these two companies have taken sharply different approaches to regulation, technology, and risk management.
Kalshi’s entire model is anchored in U.S. federal regulation. Every product it offers runs through its CFTC-designated contract market license, and all trades are settled in U.S. dollars. That regulatory foundation represents its most significant competitive advantage — and simultaneously explains why it is fighting so many legal battles, because it also gives Kalshi the legal basis to challenge state gaming authorities on preemption grounds.
Polymarket, by contrast, is built on blockchain infrastructure and settles trades using USDC, a cryptocurrency pegged to the U.S. dollar. During the Biden administration, Polymarket faced significant regulatory pressure that effectively pushed it out of the domestic American market, leaving U.S.-based users to rely on virtual private networks (VPNs) for access. The more accommodating regulatory environment under the Trump administration has created a potential opening for Polymarket to re-enter the U.S. market more directly. One notable connection between the two platforms: Donald Trump Jr. serves in an advisory capacity for both Kalshi and Polymarket, highlighting the political dimension of the broader prediction market industry.
For everyday users weighing the Kalshi vs. Polymarket decision, the practical difference often comes down to this: Kalshi provides a fully regulated, dollar-denominated trading environment with established consumer protections, though its availability varies by state due to ongoing litigation. Polymarket offers broader global liquidity and crypto-based features, but carries a different kind of regulatory uncertainty. For users located in states where Kalshi is currently subject to active legal restrictions, that geographic reality is an important factor.
What the Kalshi Lawsuits Mean for Everyday Users
If you currently use Kalshi — or you are considering using a Kalshi promo code to create a new account — understanding the legal environment before you deposit any funds is a reasonable precaution.
Is Kalshi Legal Where You Live?
Kalshi operates under a federal designation and has consistently argued in court that this federal status allows it to serve users across all 50 states, regardless of what individual state gambling laws may say. Many courts have at least tentatively agreed with this position. That said, in states such as Massachusetts, Maryland, and Connecticut, courts have indicated that state laws may retain their force. In those jurisdictions, Kalshi could be required to block access if a court order demands it.
The most practical step for any current or prospective user is to check Kalshi’s platform directly to confirm whether service is available in your particular state. Given that new rulings are emerging on a monthly basis, the availability map is not static.
Is a Kalshi Promo Code Still Worth Using?
Despite the scale of its legal exposure, Kalshi has continued to grow at a strong pace. The platform secured $1 billion in fresh funding during late 2025 and formed partnerships with major media companies, which signals that institutional investors and commercial partners remain confident that the legal disputes will ultimately resolve in the company’s favor. For users in states where Kalshi is currently operating without court-imposed restrictions, promotional offers remain a straightforward way to begin exploring the platform at a lower initial cost.
That said, it is worth carefully reviewing the terms attached to any Kalshi promo code — particularly any geographic limitations or time-based expiration conditions. It is also advisable to complete the Kalshi verification email process as soon as possible after registering, since delays in account verification can occasionally affect eligibility for bonuses tied to time-sensitive trading markets.
Could the Kalshi Lawsuit Reach the Supreme Court?
Legal analysts have pointed out that the current divergence among federal district courts — with early rulings in Nevada and New Jersey favoring Kalshi, while Maryland and Massachusetts have ruled the other way — creates precisely the kind of circuit split that the Supreme Court was designed to resolve. Active appeals are already advancing through the Third, Fourth, and Ninth Circuit Courts of Appeals. If those three circuits produce conflicting interpretations, the Supreme Court could become the only institution capable of issuing a definitive ruling on whether federal commodities law overrides state gambling authority.
The current CFTC chair, appointed under the Trump administration, has indicated a willingness to support Kalshi’s jurisdictional claims in court proceedings, adding a significant institutional dimension to how these appeals may ultimately be decided.
FAQ:
Q:1. What is the Kalshi lawsuit about?
Ans: It centers on whether a federally regulated prediction market can operate in all 50 states without state gambling licenses. As of early 2026, roughly 19 active federal lawsuits are in progress.
Q:2. Who is Kalshi founder Tarek Mansour?
Ans: He is the co-founder and CEO of Kalshi. A former Goldman Sachs and Citadel trader, he co-founded Kalshi in 2018 and became a billionaire at age 29 when the company reached an $11 billion valuation.
Q:3. How is Kalshi different from Polymarket?
Ans: Kalshi is a CFTC-licensed U.S. platform that settles trades in dollars. Polymarket is blockchain-based and pays out in USDC crypto, and has historically been restricted for U.S. users.
Q:4. Did Kalshi win its lawsuit against the CFTC?
Ans: Yes. In September 2024, the D.C. District Court ruled in Kalshi’s favor. The CFTC later dropped its appeal in May 2025.
Q:5. Is it safe to use a Kalshi promo code right now?
Ans: Yes, in most states. However, users in Massachusetts or Connecticut should first confirm availability. Always complete your Kalshi verification email promptly after signing up.
A Defining Moment for Prediction Markets in America
At its core, the Kalshi lawsuit story is really a debate over language and authority: who has the power to define what a “bet” means under American law? Kalshi’s position is that its congressional control contracts and sports event contracts are legitimate financial derivatives — hedging instruments that belong in the same legal category as futures contracts traded on the CME. A growing number of state gaming regulators take the opposite view, arguing that the company is simply repackaging a parlay bet under a more sophisticated label.
Tarek Mansour has constructed something that is, by any fair measure, genuinely innovative — a federally regulated exchange that operates at the contentious boundary between finance and gambling. Whether appellate courts eventually vindicate that model or compel the company to seek state-by-state approvals, the resolution will leave a lasting imprint on the future of prediction markets, sports wagering, and financial regulation across the United States.
With three circuit courts expected to weigh in and a credible path to Supreme Court review, the broader conflict between Kalshi and state gaming authorities is nowhere near its conclusion. What is already clear is that the prediction market sector has undergone a transformation — from a narrow financial experiment to one of the most actively litigated regulatory battlegrounds in American business.
Stay Informed — Follow the Kalshi Lawsuit in Real Time
The Kalshi legal landscape is shifting rapidly. Whether you are planning to redeem a Kalshi promo code, weighing Kalshi against Polymarket, or simply trying to understand what the Kalshi verification email process involves — bookmark this page and return for the latest updates. The next circuit court ruling could arrive at any time and may have direct implications for whether Kalshi is permitted to operate in your state.
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