Kalshi: The Predictions Market Capturing NCAA’s Interest

The prediction market Kalshi is gaining traction within the NCAA, prompting the governing body of college athletics to express concerns about its practices. The NCAA has requested specific adjustments regarding the language Kalshi uses to describe its sports markets, particularly in reference to its association with the NCAA.

NCAA’s Concerns Regarding Kalshi

Recently, NCAA Senior Vice President Scott Bearby sent a letter to Kalshi outlining pivotal concerns. He requested Kalshi to change the wording from “Outcome verified from NCAA” to “Outcome sourced from NCAA.com.” This change aims to clarify that no formal partnership exists between the NCAA and Kalshi.

Bearby also inquired about Kalshi’s approach to prop betting and its willingness to engage with NCAA investigations. Sports gambling analyst Dustin Gouker interprets this letter as a recognition that prediction markets like Kalshi are becoming a permanent fixture in the sports landscape.

Insights on Prediction Markets

Kalshi is a federally regulated prediction market operating under the Commodity Futures Trading Commission (CFTC). Unlike traditional sportsbooks, Kalshi allows users to trade contracts on various outcomes but doesn’t function as a gambling service. This distinction has positioned Kalshi as a legal platform across the U.S.

• More than $2.5 billion in sports contracts were exchanged on Kalshi during the NFL season.
• The American Gaming Association estimated that online sportsbooks took in nearly $14 billion in September 2024.

Despite its growth, Kalshi has faced scrutiny from over 30 state attorneys general. They argue that Kalshi’s structure closely resembles sports betting practices, which should be regulated accordingly. Gouker stated that states see these prediction markets as sports betting, emphasizing the need for licensing.

Understanding Kalshi vs. Traditional Sportsbooks

In a traditional sportsbook, customers bet against the house. Kalshi, however, operates on a peer-to-peer contract system. Users take opposite sides of a wager, with Kalshi facilitating the transaction and collecting fees without directly profiting from losses.

Kalshi’s scope has broadened from economic topics, like elections and unemployment rates, to include sports outcomes. This expansion raises questions about the economic consequences of these sporting events.

Integrity Concerns in Prediction Markets

So far, Kalshi’s sports contracts primarily involve game-winner predictions. However, past events, such as a live bet on a CEO’s anticipated statements during an earnings call, have raised questions about the integrity of predictions. Such incidents may lead to fears about the potential for compromised integrity in sports.

The NCAA is particularly concerned about limiting scenario-based bets that could challenge the integrity of college sports. As Kalshi seeks to expand, it joins a competitive market that includes other prediction platforms like Crypto.com and Polymarket.com. Gouker indicated that if Kalshi opts not to include player props, other services will likely step in to fill that gap.

Future of Kalshi and Prediction Markets

As Kalshi navigates the challenges posed by state regulations and NCAA concerns, it prepares for a future where prediction markets are commonplace. The ongoing dialogue about the integrity and regulation of these markets will be crucial as they continue to evolve and attract interest.