Kalshi bets on prediction markets to bypass regulatory hurdles

On October 28, 2026, Tarek Mansour, CEO of Kalshi, defended the predictive markets model during an interview, as the American platform faces several legal proceedings in the United States. These disputes, which concern the regulatory classification of its event contracts, could redefine the boundaries between financial derivatives and betting, with major consequences for a rapidly expanding sector. Context Kalshi, founded in 2018 and registered as a "Designated Contract Market" with the Commodity Futures Trading Commission (CFTC) since 2022, positions itself as an alternative to traditional forecasting methods, such as polls or expert analysis. The platform allows users to bet on various events – elections, sports results, or cultural phenomena – via standardized contracts settled in dollars or stablecoins (USDT, USDC). This model, while promising, faces persistent legal uncertainties. In the United States, the Securities and Exchange Commission (SEC), the CFTC, and several states challenge the legality of these products, arguing that some contracts could fall under gambling, a state jurisdiction, rather than federal derivatives. In Europe, the regulatory framework remains blurred, despite the entry into force of the MiCA regulation in 2024. Kalshi, which claims more than 10,000 active users, raised 120 million dollars in 2025 from prestigious investors such as Sequoia Capital and Andreessen Horowitz, illustrating the growing interest in this segment. The Facts During an interview granted to Reuters' Econ World podcast on October 21, 2026, Tarek Mansour presented predictive markets as a more reliable tool than polls or media commentators, because they "reward those who know and penalize those who are wrong." According to Kalshi's internal data, the average daily volume amounts to approximately 2.5 million dollars, with an 18% increase over the last thirty days. However, the CryptoBriefing article from October 28, 2026, partially contradicts these figures: it mentions a daily volume of 2.7 billion dollars on October 26, for a monthly total of 90 billion over the last thirty days, representing a daily average of 3 billion. Three legal proceedings are underway in the United States: an SEC investigation, a dispute with the CFTC, and a state-level lawsuit, notably initiated by New Jersey. The latter appealed to the Supreme Court in September 2026 following a decision in favor of Kalshi on appeal. The KALSH token, which is not publicly traded, has a security score of 8.2/10 according to CryptoScore Pro data as of October 28, 2026, but no tier-1 audit has been published to date. Kalshi is reportedly targeting a valuation of $40 billion as part of a new fundraising round, compared to $22 billion in May 2026, according to unconfirmed sources. The stablecoins used for settlements show relative stability: USDT (Tether) is trading at $0.9988 with a market capitalization of 181.61 billion, while USDC (Circle) remains pegged at $1 with a capitalization of 71.12 billion, according to CryptoScore Pro on October 28, 2026. Understanding Key Concepts Prediction Markets A prediction market is a platform where users buy and sell contracts whose value depends on the outcome of a future event (e.g., "Will party X win the election?"). Unlike sports betting, these contracts are often standardized and settled in fiat currency or digital assets. For example, if a contract is worth $0.60 before an election, it may reflect a 60% probability that the designated candidate will win. Kalshi acts as a central counterparty, guaranteeing payment once the result is confirmed. Stablecoin and Peg A stablecoin is a cryptocurrency designed to maintain a stable value relative to a reference asset, typically the US dollar. USDT (Tether) and USDC (USD Coin) are the two main stablecoins, with distinct mechanisms: USDT relies on diversified reserves (bonds, cash), while USDC is backed by liquid, audited assets. Their "peg" is crucial for prediction markets, as it allows for volatility-free settlements. Even a minimal deviation (e.g., $0.9988 for USDT) can impact user confidence. Designated Contract Market (DCM) In the United States, a Designated Contract Market is a platform approved by the CFTC for trading futures and derivatives. This license, obtained by Kalshi in 2022, allows it to operate under federal supervision, but does not protect it from disputes with other regulators, such as the SEC. In Europe, the equivalent would be a platform regulated under MiCA, although prediction markets are not explicitly framed there. Analysis: what is at stake Prediction markets like Kalshi rely on a valuation mechanism based on supply and demand, where liquidity is both an indicator of confidence and a lever for growth. According to CryptoScore Pro data as of October 28, 2026, the average daily volume of 2.5 million dollars – up 18% over a month – suggests growing adoption, but remains marginal compared to the 42 billion dollars traded daily on Tether (USDT). This limited liquidity exposes the platform to risks of increased volatility, especially if ongoing legal proceedings discourage institutional investors. Furthermore, the regulatory classification of contracts directly influences their attractiveness: a "commodity" status (under the aegis of the CFTC) would favor rapid expansion, while a reclassification as a "security" (SEC) would impose costly compliance constraints, potentially reducing margins. For competitors like Polymarket, a favorable outcome for Kalshi would create a legal precedent, releasing up to 1 billion dollars of capital currently frozen in similar projects. Conversely, an unfavorable decision could fragment the sector, with platforms retreating to more lenient jurisdictions (such as Malta or Singapore). Stablecoins (USDT and USDC), used for settlements, would benefit indirectly from increased adoption of prediction markets, but their stability will also depend on regulatory clarity: a tightening of US rules could weigh…