Professional Market Makers Put Kalshi’s NFL Order Flow Under New Scrutiny

Meta description: Kalshi sports contracts are drawing scrutiny as professional market makers, including sportsbook-linked firms, quote prices in event markets.

Tags: Kalshi, Flutter, DraftKings, Susquehanna, CFTC, Reynolds v. Kalshi

Market platform: Kalshi

Category: Regulation

Kalshi’s NFL markets are peer-to-peer contracts, but the prices retail traders see increasingly depend on professional liquidity providers. Susquehanna International Group has made markets on Kalshi, Flutter has forecast $50 million in 2026 prediction-market market-making revenue, and a transferred federal class action is testing whether that structure looks too much like a sportsbook.

Who is quoting prices in Kalshi sports markets?

Kalshi operates as a CFTC-regulated exchange, not as a traditional sportsbook. In that model, the exchange matches buyers and sellers and collects fees rather than taking the house side of a wager. The practical question for retail traders is who is supplying the other side of the order book when markets become liquid enough to trade at scale.

One confirmed answer is Susquehanna International Group. Kalshi announced in April 2024 that Susquehanna would become its first institutional market maker, with a trading desk built for event contracts. Kalshi also has an affiliated market-making entity, Kalshi Trading LLC, which is named in litigation over the company’s sports markets.

That does not mean every NFL trade is filled by the same firm, or that a retail trader can know the counterparty behind a given match. It does mean that the user experience of a tight, continuously quoted market can depend on professional firms with faster pricing systems, larger balance sheets, and deeper experience in probabilistic markets than most retail users bring to a Sunday football contract.

How are sportsbook companies entering prediction-market liquidity?

Flutter Entertainment, the parent company of FanDuel, has put a dollar figure on its prediction-market push. On Flutter’s August 5, 2026, second-quarter earnings call, the company discussed a full-year 2026 market-making revenue expectation of roughly $50 million. An analyst on the call referenced about $6 million in second-quarter revenue from the effort.

The American Prospect, in an August 26 article examining Kalshi’s market structure, separately quoted Flutter describing its progress in prediction-market market making as “very quick and profitable” after earnings. That comment was not the central legal question, but it captured the business logic: companies built around sports pricing are finding ways to participate in event-contract markets even as the regulatory line between derivatives and sports betting remains contested.

DraftKings has also said it is live as a market maker on three prediction-market exchanges. The public record does not establish that DraftKings is a Kalshi market maker specifically, but its entry shows how sportsbook operators are expanding beyond conventional state-licensed betting into CFTC-regulated event-contract infrastructure.

What does that mean for retail traders?

The retail risk is not that Kalshi itself necessarily takes the other side of each bet. The issue is that a retail taker may be trading against professional liquidity providers whose edge comes from speed, scale, modeling, and spread capture. That distinction matters because Kalshi’s public positioning emphasizes that it is not a casino-style house.

Kalshi has told users, “In casinos, the house always wins. With Kalshi, there is no house. We don’t win when our customers lose.” At the exchange level, that is the difference between matching contracts and booking wagers. At the market-structure level, the presence of professional makers means there may still be a sophisticated counterparty earning money from retail flow.

The Roosevelt Institute analysis cited by The American Prospect found that market takers on Kalshi lost a combined $584 million between July 2021 and May 2026. The study calculated that takers lost an average of 1.12% per trade, while market makers gained an average of 1.12%. The Prospect also reported that retail users lost more in their first three months on Kalshi than they did on traditional sportsbooks over the same period.

Those numbers should be read as market-structure evidence, not as a final legal finding. They point to the economic question regulators, courts, and traders now have to confront: whether an exchange with no formal house can still produce sportsbook-like outcomes when professional liquidity providers dominate the other side of retail trades.

What is the Reynolds case challenging?

A federal class action, Reynolds v. Kalshi Inc. et al., was filed February 20, 2026, in the U.S. District Court for the District of Oregon, case number 3:26-cv-00336. The complaint names Kalshi entities, including Kalshiex LLC, Kalshi Klear LLC, and Kalshi Trading LLC, along with Susquehanna International Group and Susquehanna Government Products.

The complaint alleges that Kalshi’s structure functions as “a ‘banked house,’ indistinguishable from a traditional sportsbook,” and says market makers contract with Kalshi to provide continuous liquidity. It also alleges that institutional firms bet against consumers when prices diverge from Kalshi’s internal projected odds. Those are allegations by the plaintiffs, not findings by a court.

The case has since moved. On June 15, 2026, the Oregon court ordered the action transferred, and the case was transferred on June 22, 2026, to the U.S. District Court for the Southern District of New York. That posture matters because Kalshi’s sports-contract litigation is now part of a broader New York-centered fight over whether federally regulated event contracts can coexist with state gambling laws.

Why does this matter beyond one NFL season?

Sports contracts have become one of the most commercially important parts of the prediction-market industry. Kalshi and Polymarket together are projected to handle $36.8 billion in combined NFL-season trading volume, compared with $16.75 billion the prior season. As volume grows, the identity and incentives of liquidity providers become central to market integrity.

The regulatory fight is still active. State officials have challenged sports event contracts as illegal gambling, while platforms have argued that CFTC-regulated derivatives fall under federal jurisdiction. At the same time, sportsbook-linked companies are no longer just outside critics of prediction markets. They are building, partnering, or making markets in the sector.

The next concrete business marker is Flutter’s third-quarter 2026 earnings report, where investors will be watching whether the company’s prediction-market revenue tracks toward its roughly $50 million full-year forecast. In court, the transferred Reynolds case will test whether plaintiffs can turn market-maker economics into a viable legal theory against Kalshi, Susquehanna, and related entities.