Kalshi Sues 23 States to Block Gambling Laws as Muni Prediction Markets Expand
Updated
Updated · Bond Buyer · Jul 8
Kalshi Sues 23 States to Block Gambling Laws as Muni Prediction Markets Expand
3 articles · Updated · Bond Buyer · Jul 8
Summary
Kalshi is pursuing lawsuits against roughly 23 states, arguing the Commodity Exchange Act gives the CFTC exclusive authority over its event contracts and bars states from restricting platform access.
That legal push comes as Kalshi tests municipal-finance contracts, including a market on whether Illinois' five pension systems will exceed $145 billion in unfunded liabilities this year.
Kalshi says it is building infrastructure for block trades and deeper liquidity so prediction markets can eventually serve as institutional hedges in the long-only muni market, though no live muni hedge product exists yet.
States, consumer advocates and watchdogs argue the contracts are effectively gambling, vulnerable to manipulation and could create a disjointed regime outside SEC oversight; New Jersey is seeking Supreme Court review.
The fight is widening beyond law and regulation into market structure, with rating agencies tightening employee rules and investors, academics and exchanges exploring whether prediction markets can become a credible muni risk tool.