New York, September 22, 2025 – Prediction market operator Kalshi is stepping into a pivotal week as it continues to surge past rivals in trading volume while fighting a fresh regulatory challenge in Massachusetts.
According to September data, Kalshi posted more than $1.3 billion in notional volume, capturing an estimated 62% of global prediction market activity. By contrast, decentralized competitor Polymarket reported around $773 million in the same period, underscoring Kalshi’s current dominance in regulated event contracts.
But the growth spurt comes with legal friction. On September 16, Massachusetts Attorney General Andrea Joy Campbell filed a lawsuit against Kalshi, arguing that the platform is effectively running an unlicensed sportsbook by offering contracts tied to sporting outcomes. The complaint notes that more than 75% of Kalshi’s activity allegedly involves sports-related markets, which regulators argue fall squarely under the state’s sports wagering laws.
Kalshi has pushed back, maintaining that its contracts are federally approved event contracts regulated by the Commodity Futures Trading Commission (CFTC), not sports bets. The firm has also emphasized its KYC, AML, and reporting protocols as evidence of compliance, positioning itself as the “regulated alternative” in a sector crowded with offshore or decentralized competitors.
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The lawsuit comes just as Kalshi is expanding product depth on economic indicators. Traders on the platform are heavily focused on Federal Reserve rate cut probabilities, with contracts pricing in a likely 25 basis point cut before year-end and multiple scenarios for additional easing in 2026.
From a capital perspective, Kalshi closed a $185 million funding round earlier this year, pushing its valuation to nearly $2 billion, with backers including Paradigm and other fintech-focused funds. Analysts argue that this war chest, coupled with rising liquidity, gives Kalshi the firepower to fight legal battles while scaling product lines.
Still, the Massachusetts case highlights the murky intersection between prediction markets and sports betting regulation in the U.S. If courts side with the state, Kalshi could be forced to retreat from a large share of its current trading base. For now, the platform remains on offense: outpacing its rivals in volume, sharpening its pitch to institutional traders, and riding the wave of regulatory uncertainty that could ultimately shape the future of prediction markets in America.
