# Gambling vs. Investing **Author:** Philipp D. Dubach | **Published:** May 30, 2025 | **Updated:** February 23, 2026 **Categories:** Investing **Keywords:** Kalshi sports betting, gambling vs investing, prediction markets regulation, Kalshi CFTC, regulatory arbitrage ## Key Takeaways - Kalshi uses its federal CFTC license to offer sports betting nationwide, even in states where gambling is illegal, arguing federal financial regulation preempts state law. - 79% of Kalshi's recent trading volume is sports-related, making the distinction between 'prediction market' and 'sportsbook' largely semantic. - A Kalshi board member is awaiting confirmation to lead the CFTC, the very agency that previously challenged the platform's legality. --- [Kalshi](https://kalshi.com/), a prediction market startup, is using its federal financial license to offer sports betting nationwide, even in states where it's not legal. The move has earned them cease-and-desist letters from state gaming regulators, but CEO Tarek Mansour isn't backing down: > We can go one by one for every financial market and it would fall under the definition of gambling. So what's the difference? It's a question that cuts to the heart of modern finance. The founders argue that Wall Street blurred the line between investing and gambling long ago, and casting Kalshi as the latter is inconsistent at best. They have a point—if you can bet on oil futures, Nvidia's stock price, or interest rate movements, why is wagering on NFL touchdowns more objectionable? Benefiting from the Trump administration's hands-off regulatory approach, with the CFTC dropping its legal challenge to their election contracts, the odds might be in their favor. Even better, a Kalshi board member is awaiting confirmation to lead the very agency that was previously their biggest antagonist. The technical distinction matters: Kalshi operates as an exchange between traders rather than a house taking bets against customers. But functionally, with 79% of their recent trading volume being sports-related, they're forcing us to confront an uncomfortable reality about risk, speculation, and what we choose to call "investing." Whether you call it innovation or regulatory arbitrage, Kalshi is exposing the arbitrary nature of the lines we've drawn around acceptable financial speculation.
_ _ _(17/06/2025) Update: Matt Levine - one of the finance columnists I enjoy reading most - just published a long piece ["It's Not Gambling, It's Predicting"](https://www.bloomberg.com/opinion/newsletters/2025-06-17/it-s-not-gambling-it-s-predicting) in his newsletter on exactly this issue:_ >_Kalshi offers a prediction market where you can bet on sports. No! Sorry! Wrong! It offers a prediction market where you can predict which team will win a sports game, and if you predict correctly you make money, and if you predict incorrectly you lose money. Not "bet on sports." "Predict sports outcomes for money." Completely different._ --- ## Frequently Asked Questions ### Is Kalshi sports betting or investing? Kalshi operates as a CFTC-regulated exchange where traders buy and sell contracts on event outcomes, including sports. While it is technically a financial exchange rather than a sportsbook taking bets against customers, 79% of its recent trading volume has been sports-related, making the distinction largely semantic. ### How does Kalshi offer sports betting in states where it is illegal? Kalshi holds a federal financial license from the CFTC as a Designated Contract Market. The company argues that federal regulation preempts state gambling laws, allowing it to offer event contracts nationwide. Several states have issued cease-and-desist letters challenging this position. ### What is the difference between gambling and investing? Traditional definitions distinguish them by expected returns, time horizon, and asset ownership. However, many financial instruments like oil futures and stock options share characteristics with gambling. The line is increasingly arbitrary when regulated exchanges let you wager on NFL touchdowns using the same mechanics as commodity futures. ### Why did the CFTC drop its legal challenge to Kalshi? Under the Trump administration's deregulatory approach, the CFTC dropped its appeal against Kalshi's election contracts. The agency has since withdrawn its proposed ban on sports and political event contracts, and a Kalshi board member is awaiting confirmation to lead the CFTC. --- *Philipp D. Dubach — [http://philippdubach.com/](http://philippdubach.com/) — 2025*