Sep 2, 2026 · 12 min
Kalshi’s sports contracts face a pivotal regulatory test
Bits + Bips: Is Kalshi Headed to the Supreme Court Next?
A circuit split over whether states can regulate Kalshi’s sports contracts could determine how prediction markets operate nationwide.
- 1The Ninth Circuit let Nevada enforce gambling laws against Kalshi, conflicting with a Third Circuit ruling favoring federal oversight.
- 2Andy Ross argues prediction markets resemble commodity exchanges because users trade against one another rather than against a sportsbook.
- 3Kalshi says event contracts serve practical hedging needs while expanding from roughly 4,000 to 10,000 markets.
Don't miss
Andy Ross uses ice cream shops’ weather-sensitive revenue and expenses to show how event contracts can hedge everyday business risks.
The brief
A Ninth Circuit ruling lets Nevada enforce gambling laws against Kalshi’s sports contracts, contradicting a Third Circuit decision and creating a circuit split that could reach the Supreme Court.
Andy Ross defends Kalshi as a commodity exchange, arguing that buyers and sellers trade competitively rather than wagering against a house as they would with a sportsbook.
Chris Perkins describes the CFTC’s position that federal commodities law preempts conflicting state regulation, while stressing that he does not represent the agency.
Ross says businesses use event contracts to hedge ordinary risks, including ice cream shops managing weather-sensitive revenue and expenses, giving the platform a purpose beyond sports trading.
The discussion tests whether small-business hedging can match major-market demand as Kalshi expands from roughly 4,000 to 10,000 markets and sports volume fluctuates.
What was said on this episode
11 statements · 9 positive · 2 neutral
Chris Perkins said commodity derivatives have always been regulated.
“derivatives on commodities have always been regulated.”
Listen at 5:32
Chris Perkins said commodity derivatives are federally regulated.
“these are derivatives on commodities are federally regulated.”
Listen at 5:41
Kalshi enables small businesses across the US to hedge operational risks.
“individual mom and pops, individual enterprises across the US can hedge their own risks of running their business.”
Listen at 7:18
Business-risk hedging through Kalshi benefits enterprises and US economic growth.
“That's just way better for enterprises, way better for growth of America.”
Listen at 7:26
The US is bringing financial innovation onshore under Chairman Selig’s leadership.
“the US is developing, bringing innovation onshore under the leadership of Chairman Selig.”
Listen at 7:49
US regulatory leadership will drive growth and safe financial innovation.
“I think that's going to drive growth and drive innovation and safe innovation within a regulatory perimeter”
Listen at 7:55
Kalshi is developing more markets and more liquid products.
“we're continuing to get that development of more markets, more liquid products.”
Listen at 8:51
Kalshi’s calibration study used perfect prediction as the benchmark for market accuracy.
“what it said was that if you imagine that you had a straight line, which is a perfect prediction, i.e. Calci's model was perfectly calibrated to what actually happened in events, you'd expect our markets to sit absolutely along that straight line.”
Listen at 9:33
Kalshi markets were closely aligned with the perfect-calibration benchmark.
“they pretty much sit along that straight line.”
Listen at 9:51
Institutional trading volume is unnecessary for a well-calibrated prediction market.
“you don't need institutional size to have a really well-calibrated market.”
Listen at 10:04
Markets with a few hundred thousand dollars traded can provide effective hedges and fair pricing.
“if an individual can hedge your risk and there's a couple of hundred thousand trading on that market, it's a perfectly good, well-priced market.”
Listen at 10:13
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.