Kalshi announces RG tools, IC360 partnership as roundtable approaches
In a post on X, Kalshi CEO Tarek Mansour said the platform is debuting a ‘Consumer Protection Hub’. This will include “features like deposit caps, trading breaks and voluntary opt-outs”. These features, Mansour said, work in tandem with Kalshi’s “market surveillance team” and regulatory systems.
The phrase “responsible gambling” (RG) is absent from the announcement. However, the features are essentially identical to those offered by regulated sportsbooks. All major operators currently offer deposit and time limits as well as self-exclusion tools.
Mansour also announced Monday that Kalshi is partnering with integrity monitor IC360 for its sports contracts. The CEO said IC360’s data will enhance Kalshi’s “ability to prevent bad actors” and report them to sports leagues and regulators.
IC360 is a pillar of the regulated industry and serves as integrity monitor for multiple professional and collegiate sports leagues. According to a release, Kalshi will utilise IC360’s ProhiBet service, which is an “encrypted list of individuals who are prohibited from engaging in prediction markets or sports betting”.
The partnership will now allow Kalshi to “monitor for prohibited bettors in real-time”, but there is currently no relationship between legal sports betting and prediction markets. It is also unclear which regulatory body IC360 or Kalshi would report suspicious activity to. Currently, prediction markets fall under the purview of the Commodites Futures Trading Commission (CFTC), which has no experience with such matters. When asked for further comment, IC360 pointed to the release.
“IC360 strongly believes that integrity in sport can be achieved through innovative technology-driven solutions and collaborative stakeholder engagement. Our partnership with Kalshi is a terrific embodiment of these principles,” Scott Sadin, co-CEO of IC360, said in the release.
Addressing opponents’ concerns
Previously, opponents of prediction markets such as Kalshi, Robinhood and Crypto.com had pointed to a lack of RG safeguards and the potential for market manipulation as reasons why they were harmful to consumers. By putting these features in place, Kalshi appears to be trying to counter such criticism.
Prediction markets have been around for years in relative obscurity. Like all futures exchanges, they allow users to purchase contracts tied to the outcome of future events. The exchanges match opposite contracts to each other and make money off of trading commissions. It wasn’t until Kalshi survived legal challenges from the CFTC last fall that the floodgates truly opened.
During the November elections, the markets took in billions worth of election contracts. Since then they have moved into sports, which has drawn the ire of the regulated industry. Most industry representatives, such as Uplay1 CEO Bruce Merati, argue that despite all the legal rigmarole, prediction markets fail to pass the “duck test”. In other words, if it looks like sports betting and works like sports betting, it is sports betting.
Kalshi and Robinhood announced a partnership ahead of the Super Bowl last month, but Robinhood quickly backed out following scrutiny from the CFTC. Kalshi and Crypto.com, however, kept their contracts active before and during the game. Robinhood and Kalshi then announced a new partnership for this year’s NCAA March Madness tournaments. In that announcement on 18 March, Robinhood said it had “been in close contact with the CFTC” regarding the contracts.
According to Casino Reports, Kalshi users generated nearly $250 million (£193.3 million/€231.3 million) worth of contracts through the first two rounds of the tournament. That nearly matches the statewide handle of $252.9 million from all of Kansas in March last year. It is also almost 8% of the total $3.1 billion legal handle predicted by the American Gaming Association (AGA), Casino Reports noted.
CFTC roundtable upcoming
In response to mounting concerns, the CFTC last month announced its intention to host a roundtable discussion on prediction markets. That discussion is expected to take place by the end of April. Dozens of comments have been submitted, with most coming from tribal gaming interests. That sector has been emphatic that prediction markets constitute gambling and therefore infringe on sovereignty and exclusivity. But the regulated industry, aside from concerns offered by the AGA, has stayed largely quiet.
By now this lack of action is likely an indication that bookmakers are examining potential business opportunities. The Closing Line reported on 10 March that DraftKings has registered “DraftKings Predict” with the National Futures Association. On an earnings call on 5 March, Flutter CEO Peter Jackson said prediction markets “could be an interesting opportunity”, but currently lack product variety.
From a federal perspective, the second Trump administration appears to be favourable to the markets. Kalshi in January named Donald Trump Jr as an adviser and, in February, President Trump nominated Brian Quinentz, a Kalshi board member, to be the next CFTC chair. According to a report from Unchained, Quinentz would not recuse himself from discussions involving prediction markets.
States starting to push back
If federal authorities appear to be amenable to prediction markets, state counterparts do not. On 4 March the Nevada Gaming Control Board (NGCB) became the first state regulator to issue a cease-and-desist order against Kalshi. At that time, the NGCB said that sports and election betting on prediction markets was “unlawful in Nevada”.
Kalshi was ordered to cease operations in the state by 14 March. But that day the NGCB announced it had agreed to an extension of “limited period of additional time” without disclosing any further details. That investigation is still ongoing.
It now appears that Massachusetts regulators are also taking a stand against the markets. According to Reuters, Robinhood is now under investigation from the secretary of state’s office for its March Madness contracts. The report said that the office last week sent Robinhood a subpoena asking how many users in the state had traded sports contracts on the exchange. Investigators have also asked for marketing materials.
“This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing,” Massachusetts secretary of state Bill Galvin told Reuters.