Swaps or Wagers? How Sports-Related Prediction Markets Exploit a Regulatory Gap That Puts Consumers and Sports Integrity at Risk
I. Introduction In January 2025, a New York-based derivatives exchange called KalshiEX LLC began listing binary contracts tied to the outcomes of NFL, NBA, NHL, and NCAA games. The contracts worked exactly like sports bets: a user paid a price between one cent and ninety-nine cents for a “yes” or “no” position on whether a team would win, and received a dollar if correct. But Kalshi did not hold a gaming license in any state. It did not operate under any state’s responsible-gambling...
