Kalshi Called Itself a Gambling Company in Federal Filing While Fighting State Gambling Laws
A November trademark filing shows Kalshi classified its platform under gambling and bookmaking services, directly contradicting the company’s legal argument that it is a CFTC-regulated financial exchange
Kalshi has built its entire legal defense around one argument: it is not a gambling company. It is a federally regulated financial exchange operating under CFTC oversight, and state gambling laws simply do not apply. Dozens of lawsuits, criminal charges in Arizona, and temporary restraining orders in Nevada have all been contested on that basis.
Then came the trademark filing that has since been made public.
In November, Kalshi filed a trademark application with the US Patent and Trademark Office that classified the “prediction market” trademark under gambling industry categories.
The filing tied the application to “bookmaking services” and “sports betting and gambling tournaments.” When the filing was made public, the company said its trademark strategy was intentionally broad, designed to protect the term from competitors in adjacent categories.
The explanation may be legally defensible. The optics are not.
The Identity Problem
Kalshi’s products look like sports betting. Its app features parlays, moneylines, and point spreads, the same product architecture used by DraftKings and FanDuel. Its revenue model charges fees on each transaction and takes a cut on losing positions, just as traditional sportsbooks do.
A George Washington University study published in February found that Kalshi contracts have an average negative return of approximately 20% when fees are included, which is consistent with the house edge built into conventional gambling products.
At the same time, CEO Tarek Mansour has repeatedly and publicly argued that prediction markets are categorically different from sports betting. That argument is the foundation of Kalshi’s federal preemption strategy and the basis on which it has sought to block state enforcement in court.
The trademark filing does not prove that Kalshi is legally a gambling operation. But it hands opposing state regulators and legislators a compelling piece of evidence to argue that the company itself, at least in some contexts, views its product through a gambling lens.
California’s Attorney General Enters the Picture
California Attorney General Rob Bonta added his voice to the growing chorus of state officials pushing back on federal preemption claims. In comments to Business Insider, Bonta said he “firmly disagrees” that CFTC oversight of prediction markets prevents states from regulating them. He added that observers should not read anything into the fact that California has not yet filed suit.
Bonta said his office has been “firmly engaged” on prediction markets throughout the recent period of rapid expansion. He also disclosed that he has been in contact with Evan Corder, his former chief of staff, who now lobbies on behalf of Kalshi. California’s tribal gaming interests have already filed lawsuits targeting the expansion of prediction markets.
Bonta’s office previously issued a legal opinion declaring daily fantasy sports illegal under California law, suggesting an appetite for aggressive positions on emerging wagering formats.
Federal Legislative Pressure
At the same time, bipartisan pressure in Congress is intensifying. Senators recently introduced the Prediction Markets Are Gambling Act, which would ban sports-related prediction market contracts entirely. The bill drew positive stock market reactions from the licensed sports betting sector.
DraftKings shares rose on the announcement, though the stock remains down roughly 37% year-to-date as prediction markets have taken meaningful market share from traditional sportsbooks.
If state enforcement or federal legislation forces Kalshi and Polymarket to obtain gambling licenses or exit certain markets, operators holding existing state licenses would stand to benefit directly. That dynamic explains why traditional sportsbooks have largely stayed quiet while state regulators do the legal heavy lifting.
The Stakes Are High
Kalshi raised $1 billion at a $22 billion valuation in March. Its revenue run rate is approximately $1.5 billion annually. It has active legal disputes in Nevada, Massachusetts, Washington, Michigan, Arizona, and growing scrutiny from California. Each case turns, in part, on whether Kalshi is a financial product or a gambling product.
The trademark filing will not be the deciding factor in any courtroom. But it is now part of the record. And in a legal environment where states are looking for any foothold to challenge the federal preemption argument, handing regulators documentation in which the company classified itself under gambling and bookmaking categories is a mistake that will follow Kalshi through a long stretch of litigation.
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