Next Predict Summit puts Kalshi's national strategy on display

Javalin Dedaj stood at a panel in New York on Friday and said something that sounds simple until you follow the money: trading activity on a designated contract market should be regulated only by the designated federal regulator. Full stop. No carve-outs for state gaming commissions, no accommodation for attorneys general who see a sports bet where he sees a swap.

The panel was called "The Jurisdiction Gap: One Ruling, Two Very Different Markets." That title is doing a lot of work right now, because the gap in question has grown into something closer to a chasm. The Third Circuit sided with Kalshi against New Jersey, finding sports event contracts qualify as swaps under the Commodity Exchange Act. The Ninth Circuit went the other way in Nevada. The Sixth Circuit found contracts are swaps but declined to preempt state gaming law regardless. Three circuits, three outcomes. The New Jersey case is now sitting with the Supreme Court, and Kalshi has until November 9 to file its brief.

What the panelists at Next Predict were trying to answer is the operational question underneath the legal one: how do you run a national business while this gets resolved? Dedaj's answer, in effect, is that you keep arguing the federal frame loudly enough that the cost of state enforcement rises faster than the benefit to any individual state. It is a litigation-as-market-making strategy. You are not trying to win every jurisdiction simultaneously — you are trying to make the circuit split so visible that the Supreme Court has no choice but to take it.

The risk in that strategy is Utah, and Utah is a specific kind of problem. Forty-nine states have some form of legal gambling. Utah has none, by constitutional design, since statehood in 1896. That is not a regulator looking to capture tax revenue from prediction markets — that is a state with no gambling infrastructure, no political constituency for a carve-out, and an attorney general who filed suit in state court seeking between thirty and sixty million dollars in alleged unlawful profits. The Tenth Circuit has already denied Kalshi's request for an injunction pending appeal. Utah is not a state you negotiate with.

The consensus read in prediction market circles is that the Supreme Court eventually resolves the circuit split in Kalshi's favor, that the federal preemption argument wins, and that Utah becomes an isolated edge case. I am not sure the consensus has fully priced Utah's specific posture. Most states challenging prediction markets have legal gambling frameworks and therefore a reason to want federal accommodation rather than federal exclusion. Utah has no such reason. It is not trying to bring Kalshi under state licensing — it is trying to remove Kalshi from the state entirely and take back the revenue it has already collected. That is a different pressure point on the CFTC's rulemaking process, and it is one that does not resolve cleanly even if the Supreme Court sides with the preemption argument, because the underlying question of whether a total-prohibition state must tolerate a federally licensed market has never been answered at that level.

The CFTC's proposed rule to expressly define event contracts as swaps is the tool that matters most in the near term. If it finalizes before the Supreme Court rules, it shifts the terrain considerably — a regulator's express definitional authority is harder for a state court to dismiss than the statutory interpretation arguments that have split the circuits. Whether the Commission moves before the November 9 Kalshi filing deadline is the question that does not have a public answer.