Kalshi’s March Madness markets surpass $200 million amid industry scrutiny

Prediction markets platform Kalshi has recorded over $200 million in trading volume on its March Madness markets, marking a significant expansion into sports-based financial contracts. This surge comes as the company navigates regulatory challenges and industry opposition.

For the first time, Kalshi has partnered with Robinhood to offer sports contracts nationwide, allowing users across all 50 states to trade on tournament outcomes. As of Monday afternoon, trading volume reached $195 million for the men’s NCAA tournament and $12.8 million for the women’s tournament.

Kalshi, which gained attention for its 2024 U.S. election markets and legal victory over the Commodity Futures Trading Commission (CFTC), has rapidly expanded its offerings to include sports-based contracts. Following its court win, the platform launched Super Bowl prediction markets and has continued to broaden its portfolio.

Currently, users can trade on:
• The men’s college basketball championship outcome.
• Elite Eight qualification.
• Game-by-game contracts, where payouts are structured based on performance. For example, a $100 contract on Arkansas pays $295 if they defeat Texas Tech.

In response to growing concerns over market integrity, Kalshi announced new initiatives on Monday aimed at reinforcing consumer protection and regulatory compliance.

The company has partnered with IC360, a sports betting watchdog firm, to monitor trading activity. Additionally, it has implemented ProhiBet, a compliance tool that blocks athletes, coaches, and team staff from trading on sports contracts. 

To promote responsible gaming, Kalshi has also introduced several measures, including a voluntary opt-out feature that allows users to restrict their trading activity. Additionally, the platform has implemented trading breaks and funding caps to help prevent excessive speculation and encourage responsible participation.

Kalshi’s founder, Tarek Mansour, said on social media site X: “We hope that our Hub sets a new standard for customer protection for the industry and encourages others to follow suit.”

Despite its expansion, Kalshi faces significant pushback from regulators and gaming industry groups.

• Nevada gaming regulators have issued a cease-and-desist order, though the company was granted an extension and continues operations in the state.

• The Indian Gaming Association (IGA) has urged the CFTC to ban sports contracts, calling Kalshi a threat to tribal gaming compacts.

• The American Gaming Association (AGA) has labeled prediction markets an “unfair economic threat” to regulated sportsbooks.