According to Gambling Insider, Kalshi is facing multiple legal challenges across multiple jurisdictions. A hearing is now scheduled for July 16 to determine whether the company should be held in contempt for allegedly violating Nevada's preliminary injunction by failing to geofence the state. The company has also opened another front in Ohio, suing the Ohio Casino Control Commission in state court to block administrative proceedings seeking a $5 million civil penalty. The commission has accused Kalshi of offering unlicensed sports betting in the state, while Kalshi argues the proceedings improperly target federally regulated event contracts. The lawsuit marks the latest chapter in Kalshi's dispute with Ohio, which began after regulators issued a cease-and-desist letter in 2025. In the latest development, a local court in Michigan granted gaming regulators a temporary, two-week restraining order against Kalshi to stop it from offering, advertising or facilitating sports betting there. Michigan Gaming Control Board Executive Director Henry Williams stated that "Kalshi is targeting Michigan's most vulnerable residents with sports betting dressed up as investing — and without intervention, the harm will keep getting worse."
According to a Bloomberg report, Spotify has demanded that both Kalshi and Polymarket remove its branding from their platforms and make clear that neither company has any partnership with the music streaming service. The request follows the discovery of manipulated streaming activity that affected a prediction market tied to Spotify's monthly U.S. music charts. Spotify reportedly detected and removed more than 500,000 artificial streams that pushed Malcolm Todd's song Earrings into the platform's most-streamed tracks in the United States for the month. However, as reported by Bloomberg, the inflated figures had already been used to settle a Kalshi market linked to the most-streamed Spotify song in the U.S. in June, with trading volume reaching $3 million on that market.
According to crypto.news, the CFTC investigation follows a Wall Street Journal report alleging that Polymarket hired dozens of mostly college-aged content creators to publish staged trading videos intended to attract new users. Bloomberg subsequently reported that the CFTC's inquiry is not limited to those marketing practices and covers additional aspects of the platform's operations. Separately, state regulators have continued challenging prediction market platforms, arguing that some contracts function as unlicensed sports betting products, while the CFTC has filed lawsuits against several states. The case has increased concerns that prediction markets may create a financial incentive for participants to interfere with the events they are betting on, with authorities in many jurisdictions viewing prediction markets not as financial instruments but as a form of gambling. However, on the positive side for prediction platforms, the CFTC and its pro-innovation chairman, Mike Selig, are aggressively trying to make the case that Kalshi and others belong under the sole jurisdiction of the agency as the U.S. derivatives regulator.
According to Gambling Insider, the Coalition for Prediction Markets, which represents several operators including Kalshi, has accused the American Gaming Association and state regulators of coordinated opposition to federally regulated event contracts. The coalition has argued that states are trying to protect gambling monopolies and tax revenue by treating CFTC-regulated event contracts as illegal sports betting. The accusation followed reports that a Maryland Lottery and Gaming Control Agency letter submitted to the CFTC criticizing prediction markets used language from templates prepared by the American Gaming Association. Kalshi has also launched Kalshi Truth, a messaging effort aimed at countering criticism of its business model, which debunks 11 claims including that sports-event contracts are simply unlicensed sports betting. Jacki McGavick stated that "While states waste taxpayer dollars defending casino and sportsbook monopolies, Kalshi is fighting for consumers' right to a fairer, more transparent market."
The sports prediction market fight has moved closer to the U.S. Supreme Court, with Justice Samuel Alito giving New Jersey until August 4, 2026 to file a petition challenging Kalshi's Third Circuit win against the state. The filing could become the first opportunity for the U.S. Supreme Court to weigh in on whether the Commodity Exchange Act preempts state gambling laws governing sports-event contracts. New Jersey Solicitor General Jeremy Feigenbaum wrote in the extension application that "This issue is tremendously important: The Third Circuit majority's conclusion — that sports bets fall under the exclusive jurisdiction of the Commodity Exchange Act and that the Act preempts state regulation of these sports bets—would federalize a multibillion-dollar-a-year sports-wagering industry at the expense of every state law in the country." Massachusetts has also escalated its case against Kalshi after a judge allowed the attorney general to file an amended complaint to the ongoing lawsuit in state court. The fake-stream scandal reveals settlement risk that runs deeper than price manipulation, as Spotify can retroactively scrub data that event contracts rely on, turning a blacklist decision into a market resolution event.
