The American legal tradition of balancing state authority with federal control is being tested by a new frontier: the online forecasting market.
At the heart of everything is Donald Trump Jr., advised Karshi. Nevada and New Jersey have issued suspension orders against calci on forecast market sports contracts, claiming they are violating the state’s gambling laws.
However, Calci argued that what it offers is not a gambling venue, but a forecast market, claiming that it is regulated by the Commodity Futures Trading Commission and the Commodity Exchange Act.
“Obviously, I think Karshi will beat these cases,” Brogan said in an interview with Coindesk. “Looking at the language of the Commodity Exchange Act (CEA), CFTC states that it has exclusive jurisdiction over contracts that are within the regulatory scope of derived and event contracts.”
Forecast markets such as Kalshi and Polymarket act as neutral intermediaries and match orders as well as other exchanges based on the scope of CFTC. There is no sportsbook with a forecast market. Market operators do not bet on users.
For forecast market operators, sports is a major growth area. Polymarket Analytics data shows that this category outperforms the 2024 election.
“(Calsi) does not take the betting aspect of that case as a market in that case, so it fundamentally changes the incentives involved and makes the product different in the overall way,” Brogan explained.
Kalshi has self-certified these event agreements with the CFTC. This is a process that allows federally regulated derivative exchanges to list new products by certifying compliance with regulatory requirements without the need for express prior approval from the agency.
The CFTC appears to embrace the argument that sports games results are commodities, and it argues that President Donald Trump’s choice to run the committee, Brian Quintents, in 2021, can serve legitimate economic purposes as a hedging instrument that should not be automatically restrained under the CEA, unlike pure betting activities.
Brogan recognizes the reasons behind Nevada’s concern given the state’s historical dependence on gambling revenue.
However, he points out that Nevada’s actions against calci could incorrectly raise serious questions about Nevada’s own gambling market legitimacy.
The story continues