Meta description: Kalshi faces New York and Minnesota legal fights as June trading volume reached $31.5 billion and the CFTC advances event-contract rules.
Tags: Kalshi, Polymarket, CFTC, New York, Minnesota, Tarek Mansour
Market platform: Kalshi
Category: Regulation
Kalshi entered August with a $22 billion valuation, $31.5 billion in June trading volume, and a widening set of legal fights over whether federally regulated event contracts can coexist with state gambling law. New York is pressing Kalshi in court, Minnesota’s prediction-market ban has been blocked for now, and the CFTC is moving toward a new event-contract rule.
The company’s growth is no longer a narrow startup story. It is now one of the central tests of how far the Commodity Exchange Act reaches when prediction-market contracts look, to state regulators, like sports betting or gambling products. Kalshi says it operates as a federally regulated derivatives exchange. State officials in New York, Minnesota and other jurisdictions argue that at least some of those markets intrude on state gambling regimes.
How big did Kalshi get before the latest legal pushback?
Kalshi was valued at $22 billion in May 2026 after a $1 billion funding round led by Coatue, according to Forbes. Forbes estimated that cofounders Tarek Mansour and Luana Lopes Lara each owned about 12% of the company, putting each founder’s fortune at roughly $2.6 billion at that valuation.
The valuation jump was steep but not a straight twelve-month move from $2 billion to $22 billion. Forbes reported Kalshi was valued at $2 billion in June 2025, while Kalshi announced an $11 billion valuation in December 2025. Public reporting also placed the company at a $5 billion valuation in October 2025. Financial Times reporting, later republished by The Block, said Kalshi had discussed a potential funding round that could value the company at about $40 billion.
Trading volume has moved quickly alongside the private-market valuation. The Block reported on July 1 that Kalshi recorded $31.5 billion in June 2026 trading volume, up 87.4% from $16.81 billion in May. The same report put Polymarket’s main non-U.S. platform at $10.26 billion for June and Polymarket US at $3.04 billion, for $13.30 billion combined across the two Polymarket venues.
Forbes reported in May that Kalshi had about 2 million monthly active traders and that annualized volume had more than tripled over six months to $178 billion. The Block’s June figures suggest the sector’s near-term growth was helped by World Cup-related markets, including large volumes on tournament winner contracts.
What did Mansour say about Kalshi’s operating style?
Mansour has described Kalshi’s internal style as less bound to a standard startup playbook than to the product problem itself. In Sequoia Capital’s “Chaos by Design” podcast transcript, Mansour said, “I have a lot of I’m gonna make it up as I go,” when asked whether he followed a CEO playbook.
He also said that the approach applied to Lopes Lara as well: “Both of us, we’re probably very sort of entrepreneurially illiterate. Like, we haven’t read all the books, we haven’t watched all the podcasts.”
That framing matters because Kalshi’s public posture is informal in some founder interviews, while its legal strategy is formal and aggressive. The company is litigating against state regulators, defending its sports and event contracts as federally regulated instruments, and relying heavily on the CFTC’s view that designated contract markets fall under federal commodities law.
What is New York doing against Kalshi?
New York Attorney General Letitia James sued Kalshi on July 31, 2026, alleging that the company was operating an illegal gambling business in the state. In a release issued with Governor Kathy Hochul, the Attorney General’s office said it sought an order stopping Kalshi from operating as an unlicensed gambling business, forfeiture of illegal gains, restitution to users and fines equal to three times the gains the company allegedly made through illegal conduct.
That lawsuit is separate from KalshiEX LLC v. Williams, Kalshi’s federal case against New York Gaming Commission officials. In that case, U.S. District Judge Analisa Torres of the Southern District of New York denied Kalshi’s request for a preliminary injunction on July 7, 2026. On July 27, she also denied Kalshi’s motion for an emergency injunction pending appeal, according to the court’s orders in that federal case.
The distinction is important. The July 7 and July 27 orders were not rulings in the Attorney General’s July 31 lawsuit. They were rulings in Kalshi’s separate federal challenge involving New York Gaming Commission officials. Together, the proceedings leave Kalshi facing both defensive and offensive litigation in New York, with state officials arguing that its products fall within gambling law and Kalshi arguing that federal commodities regulation controls.
What is the New York City Council investigating?
New York City Council Speaker Julie Menin announced an inquiry on August 12, 2026, into marketing practices at Kalshi, Polymarket, Coinbase and Gemini Titan. The Council sent letters with more than 60 questions seeking information on New York revenue, local user counts, user demographics, marketing operations and compliance practices. The companies were given 14 days to respond, according to reporting on the letters.
The Council probe focuses on consumer protection and marketing, not the same legal theory as the Attorney General’s lawsuit. Reporting by The Wall Street Journal said the inquiry followed scrutiny of prediction-market influencer campaigns, including Polymarket promotional videos that allegedly showed staged trades or misleading depictions of platform activity. Kalshi was not the focus of that specific Journal review, but it was included in the Council’s broader inquiry.
The Council cannot decide the federal preemption question that is central to Kalshi’s litigation with state regulators. It can, however, hold hearings, issue subpoenas and consider local legislation or public education measures tied to marketing and consumer risk. That makes the Council process a reputational and political pressure point while the court fights continue.
Is Kalshi legal in Minnesota right now?
Kalshi and other CFTC-registered designated contract markets are protected for now from Minnesota’s prediction-market ban. On July 27, 2026, U.S. District Judge Katherine Menendez of the District of Minnesota granted preliminary injunction motions in related cases brought by the CFTC, Kalshi and QCX, the Polymarket US operator. The order blocks Minnesota from enforcing Minn. Stat. § 609.7615 against entities registered as designated contract markets by the CFTC until a final decision on the merits.
The CFTC sued Minnesota on May 19, 2026, one day after Governor Tim Walz signed legislation that would have made operating or assisting a prediction market a criminal felony. In its press release announcing the lawsuit, the CFTC said the law was scheduled to take effect August 1 and would reach CFTC-regulated markets, including weather-related event contracts.
Judge Menendez wrote that Minnesota’s statute was “likely at least partially preempted” by the Commodity Exchange Act because the CFTC has exclusive jurisdiction over swaps traded on designated contract markets. The order did not give the industry a total final victory. It preserved the status quo while the merits are litigated and left room for contract-specific questions about whether particular markets are federally regulated swaps.
For prediction-market operators, the Minnesota order is a meaningful win because it blocks a criminal ban before enforcement begins. For state regulators, the caveat matters because the ruling does not settle the legal status of every event contract. The case remains active, and the injunction lasts until a final merits decision.
Where does the CFTC rulemaking stand?
The CFTC’s June 2026 notice of proposed rulemaking on prediction markets remains the most important federal policy track outside the courts. In a June 10 release, the agency said the proposal would amend Regulation 40.11 and add Appendix F to Part 40, creating a framework for determining whether event contracts involve activities listed in Commodity Exchange Act Section 5c(c)(5)(C), including gaming, war, terrorism, assassination or conduct unlawful under federal or state law.
The Federal Register notice set July 27, 2026, as the deadline for written comments on that June proposal. The CFTC said the proposal would define terms including “gaming” and “involve,” and would set out a 90-day review process for public-interest determinations. The agency also noted that the June proposal followed a March advance notice of proposed rulemaking, whose comment period had a separate April 30 deadline.
The rulemaking will not automatically resolve pending state lawsuits, but it could shape how the CFTC reviews sports, entertainment and other event contracts going forward. It also gives exchanges, state regulators, tribes, gaming companies and consumer-protection groups a federal forum for the same core dispute now playing out in court: whether event contracts are financial instruments, gambling products, or a category that forces both systems to define their boundaries more precisely.
What is the next milestone?
The immediate dates have already passed: Minnesota’s August 1 effective date was blocked by Judge Menendez’s July 27 order, and the CFTC’s July 27 comment deadline for the June proposal has closed. The next concrete milestones are procedural. The Minnesota cases move toward a merits decision, Kalshi’s New York federal appeal proceeds after Judge Torres declined emergency relief, and New York’s July 31 Attorney General lawsuit begins its own schedule.
For Kalshi, the stakes are direct. Its June volume and May valuation show that prediction markets have moved into mainstream scale. The legal calendar will determine whether that scale can continue under a primarily federal commodities framework, or whether state gambling regulators can force a narrower market structure for sports and other contested event contracts.
