Can states block Kalshi’s sports event contracts?
A court fight between the State of New Jersey and the prediction-style gambling platform Kalshi has extreme implications for the world, two former U.S. senators claimed.
What should we make of their alarming predictions of a widespread economic “disaster” stemming from a Kalshi court defeat?
States Seek to Block Kalshi
New Jersey is at the forefront of a battle over prediction-style sports gambling, which is under federal oversight. Many states that regulate traditional online sports betting back New Jersey in the fight, which was before the Third Circuit Court of Appeals as of September 2025.
Sports betting on Kalshi and other similar platforms is like stock trading. Sports outcomes are traded as yes/no markets. The peer-to-peer format is distinct from house-banked sports betting.
In an op-ed published Sept. 9, 2025, former U.S. Sens. Max Baucus and Saxby Chambliss argued that if states win the right to block sports trading, it could undermine the entire system of financial speculation.
“If Kalshi loses, states could have carte blanche to prohibit any futures or other derivatives contract they object to, potentially throwing the $730 trillion global derivatives market into chaos,” they wrote.
They warned of a “global disaster that dwarfs the wreckage of the last crisis” in 2008 if states score the authority to block markets like Kalshi sports betting.
“Allowing states to start chipping away at its [the CFTC] power would sow investor doubt, potentially unraveling U.S. primacy in the marketplace and sparking capital flight from our commodities markets. The market disruption that would follow is a summer sequel nobody wants to see.”
Donald Trump Jr. is an advisor to Kalshi and an investor in Kalshi rival Polymarket.
In addition to the New Jersey federal case, the State of Massachusetts sued Kalshi in state court.
Bleak Situation for Problem Gambling
Gambling Harm will let you decide whether Baucus and Chambliss are fear-mongering on behalf of the nascent prediction sports gambling industry or if they have a legitimate fear.
Whether states can block Kalshi’s sports markets will play out in the courts.
What we can say for sure is that people who have experienced sports gambling-related harm are an afterthought. Baucus and Chambliss didn’t mention or allude to addiction in their op-ed.
They didn’t mention that a Kalshi rep this summer suggested the platform doesn’t care much about addiction, comments that drew the ire of gambling regulators in Massachusetts.
The U.S. federal government, which earmarks no money for problem gambling prevention and treatment, has so far allowed prediction online sports betting to spread nationwide.
More than 30 states have sanctioned traditional online sportsbooks like DraftKings and FanDuel. Offshore sportsbooks and so-called social and sweepstakes sportsbooks also siphon money from Americans.
The 2020s have been a sports betting feeding frenzy on vulnerable Americans.
Maybe Baucus and Chambliss should have mentioned the “chaos” of the sports gambling addiction crisis. Sports betting addiction statistics show that more than half of online bettors chase losses, and nearly 40% have felt ashamed after betting.
Early research shows that sports betting is hurting the financial health of Americans. It’s also causing emotional problems, with 1-in-5 sports bettors admitting to verbally abusing an athlete.
Sports betting isn’t causing an economic catastrophe like the one Baucus and Chambliss claim will occur if states can block prediction sports gambling products. Nonetheless, Americans have been worse off since sports betting went mainstream.
As for the fate of prediction sports gambling, SBC Americas reported that the U.S. Supreme Court could eventually take up the states rights’ case. A final resolution could be two years away.
Can states block Kalshi and use public health and safety rationales against CFTC-regulated sports contracts? Time will tell.
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