Kalshi CEO Tarek Mansour said Wednesday that the legal fight over U.S. prediction markets will not decide whether states or a federal regulator police the industry, but whether the business survives onshore at all.

"It's not a choice of state versus federal market," Mansour said at the DC Fintech Week event near Washington, in Arlington, Virginia. "It's a choice of whether prediction markets exist in the U.S. or whether they go offshore."

A growing roster of states has sued Kalshi and other event-contract firms, arguing their sports-related offerings constitute illegal wagering that belongs under state gambling regulators. Kalshi and the Commodity Futures Trading Commission, which regulates the exchange, counter that the federal agency is the sole appropriate watchdog. The dispute has reached multiple federal appellate courts, which have split: one major ruling favors Kalshi, two back the states. New Jersey has petitioned the U.S. Supreme Court to hear the case, and outside groups, including the National Football League, have filed briefs with the court.

Despite the adverse appellate rulings, Mansour signaled confidence. "We feel pretty good about where we stand overall," he said.

Why the sports-contracts argument matters

The core legal question turns on whether sports event contracts carry sufficient economic consequence to qualify as federally regulated financial contracts rather than state-licensed gambling. Mansour rejected the distinction outright.

"The notion that sports does not have economic consequence is ludicrous," he said.

He traced Kalshi's regulatory position to the firm's founding, saying the business "really elegantly fit under definitions of commodity" in existing federal law. He called the Commodity Exchange Act a "truly beautiful statute" — one flexible enough to carry futures markets from agricultural products to oil and metals, and then to less tangible instruments such as swaps. Event contracts, in his framing, are the next step in that progression.

The operational stakes are concrete. A state-level win would expose Kalshi and rival platforms to 50 separate licensing regimes, each with its own gambling rules, tax structures and product restrictions. Offshore relocation, the alternative Mansour described, would place the exchanges outside CFTC jurisdiction entirely and beyond U.S. investor protections.

CFTC moves to lock in its authority

The CFTC has not waited for the courts. Last week the agency issued one rule and proposed another that would place event contracts explicitly within the definition of swaps it polices, excluding state gambling regulators from the space. If finalized, the rulemaking would give the federal framework administrative weight that compounds whatever the appellate litigation produces.

The parallel tracks matter for timing. The Supreme Court has not said whether it will accept New Jersey's petition, and an appellate split makes review more plausible. A certiorari decision would set the enforcement window for state gambling authorities, which have so far been constrained by litigation rather than statute.

Mansour rebuts wash-trading claims

Mansour also addressed accusations that Kalshi inflates trading volume in its bitcoin and ether perpetual-futures markets. Critics on X, formerly Twitter, flagged recurring trade sizes that accounted for a significant share of platform volume.

"Twitter went, like, 'Oh my God, there's a spike. There must be inflation of volume or anything like that.' It's none of it," he said, attributing the recurring sizes to fixed-size orders from market makers.

"There's a lot of crazy" on the platform, he said of X, adding: "Maybe the broader point about this is how much people misunderstand markets. They're just complicated. They're not easy to understand."

The volume question carries regulatory weight of its own. Wash trading falls under CFTC anti-manipulation authority, and market-maker structure is the standard defense exchanges raise when recurring order sizes draw scrutiny. Mansour offered the explanation but no third-party audit or exchange data to substantiate it.

What comes next

The immediate calendar belongs to the Supreme Court. If the justices take New Jersey's case, arguments would frame the boundary between the Commodity Exchange Act and state gambling statutes for the first time at that level. If they decline, the appellate split stands, and the CFTC's pending swaps rulemaking becomes the decisive market-structure event — one that would move oversight of event contracts decisively to Washington regardless of what individual state courts do.