How Soon Will Kalshi Become A Fully Baked Sportsbook?

News roundup: Robinhood CEO talks prediction markets and sports events in earnings call; Polymarket saw $1.1 billion in trades on Super Bowl; CFTC commissioner says election betting is here to stay

The Event Horizon is a weekly newsletter from gambling industry consultant and analyst Dustin Gouker on the prediction markets industry. He runs a daily newsletter on the online gambling industry called The Closing Line.

I kind of lied in the intro above; I’ve written two newsletters since the last weekly one because of the pace of the news:

• Kalshi board member Brian Quintenz has been nominated to lead the Commodity Futures Trading Commission; in the same newsletter, more on Kalshi partnering with investment platform WeBull.

• Late last week, Kalshi filed to offer single-game sports markets (think moneyline bets).

All of the news of late bodes well for Kalshi’s future. It’s almost far-fetched to think election markets are getting reined in by the CFTC, although a federal appeals case involving the agency and Kalshi is still active.

And at this point I would start assuming that sports event trading isn’t going anywhere, at least as it exists currently at Kalshi (there are now a few dozen markets on the platform; more on that later).

If Kalshi is going to become the equivalent of a sportsbook (ie become a true threat to legal — or even illegal — sportsbooks), what does it have to do? A few thoughts:

• Add more granular markets: Right now, Kalshi is mostly a “futures” sportsbook, which at the end of the day is a pretty small piece of what happens at a sportsbook. Those markets become more interesting as they get closer to resolving in real time (ie the “Super Bowl champion” market became a de facto moneyline bet on either the Kansas City Chiefs or the Philadelphia Eagles). So what do more granular markets look like?

  • While Kalshi has filed to offer single-game markets, almost a week later no such markets have been posted. But this is obviously the next milestone, should they move forward.

  • Player proposition markets — which are popular both via sportsbooks and fantasy parlay operators — are something Kalshi would have to get into, if allowed, as well. Think over/under how many home runs a player hits in a baseball game, or rushing yards in a football game.

  • The good news is everything Kalshi offers instantly becomes a “live betting” market; you can get into or out of positions during games. So far, in-game trading has surpassed pre-match; there is far more activity and liquidity while events are going on.

  • All of the above would help them with the velocity of trading that they will need to scale the sports product.

• Figure out parlays: Sports betting in the US is no longer about single bets on match outcomes. The brave new world is parlays, stringing together multiple bets to create a potentially larger payout. Of course, these bets are also going to lose more often, but it’s what the average sports bettor has declared they want with their wallet. While there are ways to get larger payouts on Kalshi, that’s typically just from betting single longshots. Will Kalshi be able to create a parlay-like product? It doesn’t take too much creativity to imagine a class of markets that allows you to combine different outcomes into a single, riskier market. But will even a friendly CFTC green-light that, and will Kalshi be able to create the liquidity to stand up such a market?

• Add users and improve the user experience: Kalshi acquired a ton of users leading up to the November elections. Deals like the one announced with WeBull this week (although that didn’t cover sports), could help to create a critical mass of users trading into their markets. (Robinhood recently said it was going to launch trading on Kalshi’s sports markets before pulling back a day later.) For now, Kalshi needs to get sports bettors into its own platform. Over the weekend, as people could bet on the Super Bowl in 50 states, Kalshi rose to No. 21 among all free finance apps, according to SensorTower data. Whether the customer acquisition and betting volume on the game ($27 million) is good or bad is a bit in the eye of the beholder. More on this in the roundup.

  • Part of the problem might lie in creating a product that caters more to a sports bettor. If you’re familiar with trading, the product is fine; but to a casual sports fan or even a sports bettor, the product might not be ideal.

As we sit here, it’s still a big “if” that Kalshi will be able to continue to push the envelope. But if it continues unabated, these are some of the places you would look for Kalshi to push more.

The Closing Bell

A quick roundup of other prediction market industry news and thoughts:

• Robinhood’s CEO said in Wednesday’s earnings call that they are very much still bullish on prediction markets, and sports event trading in particular. Here’s the transcript of what Vlad Tenev said:
  Dan Dolev

  Hey, team great job is always epic results again. I have a quick question on sports contracts. You mentioned it at the Analyst Day, piqued our interest. We did our own internal survey work, which showed massive opportunity with a significant amount of your users also engaged in sports betting. You started it out, it was shut down temporarily. So can you maybe lay out some of the long-term plans or medium-term plans for this very important part of the universe? Appreciate it.

  Vlad Tenev

  Thanks, Dan. Yes, I'll field that one. I think prediction markets are the future. I think they're the future not just as an active trading asset, but also news and information. And Robinhood's going to be right there leading the way. I think we're going to continue to innovate and -- you saw this last year when we launched the presidential election market. So we were one of the few platforms that offered the ability to trade the election. And that was very successful for us.

  We had over 0.5 billion contracts traded in right around a week leading up to the election. And so what you should expect from us is a comprehensive events platform that will give access to prediction markets across a wide variety of contracts later this year. So the team has been hard at work at that. As with any new innovative asset class, we're pushing the boundaries here, and there's not regulatory clarity across all of it yet, in particular, sports, which you mentioned. But we believe in it, and we're going to be a leader. So you should expect us to not just offer it, but continue to drive and push for regulatory clarity industry-wide.

• CFTC Commissioner Summer Mersinger says election event prediction markets are 'here to stay' (The Block): "Congress could always come in and tell us differently," Mersinger said in the crypto-focused webinar. "Of course, we’re going to pivot and do what they tell us to do. But as far as the way the commission is going to handle this going forward, short of a rule-making changing things, election contracts are here to stay and we’re going to have to adapt to that environment and those markets. And I think it’s a good thing."

• How good was Super Bowl trading?: Caught this from Sportico and this headline is almost propaganda. “Kalshi’s In-Game Trading Pops in Latest Warning for Sportsbooks.” I don’t mind anyone who is bullish on the future of sports prediction markets. I am bullish on them! But, my lord, FanDuel took twice as much handle in New York on the Super Bowl than Kalshi did in 50 states. And that’s just one operator! Let’s pump the brakes a bit on Kalshi scaring the sportsbooks. Sportsbooks are probably somewhat worried, but not because of the Super Bowl numbers. I am also glass half-empty on these numbers, but I notoriously hate everything.

  • Meanwhile, Polymarket reported $1.1 billion in bets on the Super Bowl. Polymarket has said it blocks US users.

• There are a lot of sports markets now at Kalshi: I count 39 different sports markets available for trading at Kalshi as of this afternoon; they have quietly been adding more over the past week or so.

  • Basketball, 11: The most interesting thing here is you can now bet on college basketball tournament winners, which is perhaps the market that will get the most scrutiny. The NCAA has pushed back on wagering in the legal market, and having these available in 50 states with fewer guardrails will likely seem suboptimal to many in the college sports ecosystem.

    • You can bet on the winners of five men’s college basketball conferences, including the ACC, SEC, Big Ten, Big 12 and the Ivy League. By the championship games of the conference tournaments, this will be de facto moneyline betting on two teams.

    • You can also bet on the champions of the WNBA and women’s college basketball.

  • Soccer, 7: The champions of seven different leagues/tournaments: Champions League, La Liga, Serie A, Bundesliga, Premier League, Europa League, and FA Cup.

  • Tennis, 7: The champions of four majors and three smaller events. Notably, tennis is one of the sports that has had the most issues with corruption and integrity issues, although not at the highest levels.

  • Golf, 5: Five tournament winners, including The Masters and this weekend’s Genesis Invitational.

  • Baseball, 3: World Series and National League and American League winners.

  • Football, 2: College football champion and 2026 Super Bowl.

  • Chess, 1: Freestyle Chess Grand Slam Weissenhaus Champion.

  • Formula, 1: Drivers Champion.

  • Hockey, 2: Stanley Cup winner, 4 Nations winner.

• Sports is off the top navigation bar at the Kalshi app. Once the Super Bowl ended, sports lost the prime real estate at the top of the Kalshi navigation. You can still find the sports markets, but you have to go to the search function. It is still on the nav bar on the more expansive desktop navigation. It’s interesting that it’s getting a little less limelight even as they add more sports markets. Politics and the Oscars are getting top billing. (Later in the day, golf’s Genesis Invitational was added to the top nav since it was a live trading option.)

• Is Kalshi a gambling product or not? Legally, it exists as a prediction market under the auspices of the CFTC. As far as the user experience, it’s 100% gambling, and it’s marketed by Kalshi as such. See my LinkedIn post here and below find an example of how Kalshi positions the product, even outside of sports. As Kalshi YOLO’s its way into sports and continues to grow, this kind of marketing will come under more scrutiny:

  

  • I also ranted about this topic on my podcast at my other newsletter:

Episode 12: Kalshi Is A Sportsbook, And I'm Waiting For The Media To Be Mad About It