Kalshi Bought On-Court Signage in the One State Suing It for $36 Billion

Editor's note: TrueEdge builds odds tools and earns affiliate commissions from licensed sportsbooks. This piece argues a position on prediction-market regulation, and our commercial interest runs toward the sportsbooks. Weigh it accordingly.

Kalshi announced on August 31 that it is the official — and exclusive — prediction market partner of the US Open, multi-year, starting with this year's singles main draw. Branding on screens and signage across the grounds. Real-time market data planned for the tournament broadcast. Hospitality at the semifinals and finals. On-ground activations at the Billie Jean King National Tennis Center. The USTA put its own announcement out on September 1.

The Billie Jean King National Tennis Center is in Flushing Meadows, Queens. On July 31, New York's attorney general, Letitia James, sued Kalshi in state court over its sports contracts, seeking damages north of $36 billion and a permanent injunction. Her position, in the state's own announcement: prediction markets like Kalshi "are gambling platforms, plain and simple."

So Kalshi has bought two weeks of signage inside the jurisdiction that is trying to shut its sports book down, at an event the state's own gaming commission has told it is off-limits without a license. That is not a scheduling accident. It is the strategy.

The bet Kalshi is making is a normalisation bet

Kalshi's legal argument is that its sports event contracts are federally regulated derivatives and that the Commodity Exchange Act preempts state gambling law. That argument is losing more often than it is winning. Judge Analisa Torres denied Kalshi a preliminary injunction against New York's gaming commission in July and denied an injunction pending appeal later the same month; Kalshi took it to the Second Circuit, where it is pending. On August 28, a Ninth Circuit panel ruled against Kalshi in No. 25-7516, affirming the dissolution of its preliminary injunction and holding it had not shown the CEA likely preempts Nevada's gaming law as applied to sports contracts. The opinion works through the statutory definition of a "swap" and concludes that the broad reading Kalshi needs does not survive the surrounding scheme. (Accounts of who wrote it differ — Holland & Knight's analysis credits Judge Kenneth K. Lee; other write-ups name a different member of the panel. We are not going to guess, and it does not change the holding.) The Third Circuit went the other way in April. That split is why everyone expects this at the Supreme Court.

While the courts sort out whether the product is a swap or a bet, Kalshi is spending money to make the question feel already answered. A logo on Arthur Ashe is worth more than a brief. It tells a hundred thousand people a day that this is an ordinary sports sponsorship, no different from the watch brand or the airline, and it does so in the exact venue where the state says it is illegal. Congress has a bill sitting in committee — S.4160, the Prediction Markets Are Gambling Act, from Adam Schiff and John Curtis, with Catherine Cortez Masto co-sponsoring — that would bar CFTC-registered entities from listing contracts that closely resemble sports bets. Nothing normalises a product against a bill like that faster than a Grand Slam putting it on the court.

The integrity framework is real, and it is the tell

Give Kalshi this: the framework attached to the deal is more specific than anything a bookmaker has ever agreed to in tennis. Kalshi says it will not offer markets on umpire decisions, injuries or code violations. It has a data-sharing agreement with the International Tennis Integrity Agency for real-time market surveillance, and it is building a joint standards framework with the USTA and the ITIA.

Read that list again. Those are the carve-outs you write when the risk you are managing is that somebody will corrupt a tennis match for money. Umpire calls and code violations are the classic spot-fixing surfaces because a single participant can produce them on cue. A financial exchange listing an interest-rate contract does not need to promise it will not list markets on whether a bond trader shouts at somebody.

Kalshi's lawyers tell federal judges its contracts are not wagers. Its integrity team negotiates as though they are. Both statements are being made in public by the same company in the same fortnight.

What the volumes look like at the bottom of the sport

Ben Rothenberg, reporting on September 1, pulled the numbers that make the integrity question concrete. A first-week US Open match between Flavio Cobolli and Francisco Comesaña carried $21.7 million in trading volume. That is roughly four times what the singles champion takes home — the US Open pays $5.5 million to each winner.

Then he went down the ladder. A Challenger-level match in Porto: $2.7 million. An M25 Futures match between two players whose 2026 prize money to that point was $2,761 and $836: more than $500,000 traded. That is the fixing incentive stated as arithmetic. A player earning under $3,000 for a season is standing in the middle of a half-million-dollar market on his own result.

None of that volume is created by the USTA's signature. It is already there, and it was already there before Kalshi's tennis volume grew — the company's own figure — 25x year over year. But the USTA's signature is what converts it from a thing happening to the sport into a thing the sport is paid for.

The players noticed

Jessica Pegula, after her second-round win over Sofia Kenin, was asked about it. "Players can't do anything off of a betting type of sponsorship. But, you know, the tournaments profit off of a lot of that stuff." And: "We get a lot of negativity from people that use stuff like that from bettors, whether you win or lose. It doesn't even matter sometimes. And we get a lot of hate for it on social media."

That is the cleanest statement of the asymmetry anyone has managed. Players are barred from betting endorsements and disciplined for association with the sector; they absorb the abuse the sector's customers generate; the tournament sells the category. Rothenberg's piece collects the rest — Clara Tauson's resigned "they need the money?", Alejandro Tabilo noting that "for us, they don't allow anything like that," Matteo Berrettini describing threats against his family, an Italian player sent a photograph of a gun before a qualifying match at Indian Wells in March.

There is also a precedent nobody at the USTA seems eager to discuss. Craig Tiley, now the USTA's chief executive after 21 years running Tennis Australia, put William Hill on the Australian Open in 2016 — the same tournament at which a BBC and BuzzFeed investigation into tennis match-fixing broke. The bookmaker's advertising was gone the following year, and the Grand Slams stayed out of the betting-sponsor business for close to a decade. Tiley is the executive who ended that, twice.

The strongest counterargument

It goes like this, and it is not weak. Tennis was already saturated with wagering money it neither controlled nor could see. The Futures-level volume Rothenberg documented exists whether or not the USTA signs anything, and it is precisely the volume the sport most needs visibility into. A sponsorship that carries a real-time data-sharing agreement with the ITIA hands the integrity body surveillance access it did not previously have on this venue, and hands it to the largest single pool of tennis trading in the world. Refusing the money would not have removed the market. It would have removed the window into it.

That is a serious argument and we take it seriously. Two things blunt it.

First, the ITIA's own public response is conspicuously flat. Asked about the deal, the agency said betting and trading markets "are evolving extremely quickly" and that "whilst commercial deals are outside of our scope, we are working closely with our funders on the identification and the management of the risks." An integrity body that had just been handed a decisive new tool would say so. That reads like a body describing a situation it did not choose.

Second, the deal is exclusive. Exclusivity blocks competitors from advertising at the venue and in the broadcast. It does nothing for integrity — surveillance improves with more venues reporting, not fewer — and it is worth a great deal commercially. The integrity framework is bundled with an anti-competitive provision, and only one of those two things is being used to sell the deal publicly.

Where we land

We have argued in this space against criminalising federally licensed exchanges, and we still do. States prosecuting a CFTC designated contract market is a bad way to resolve a genuine question about federal jurisdiction, and the Supreme Court should take the Third-versus-Ninth split and answer it.

That position does not require pretending this sponsorship is normal. An 18-year-old in New York cannot open a sportsbook account to bet the US Open and can open a Kalshi account to trade it — Fortune, working from a CNN analysis, put 18-to-21 trading on the platform at $5.4 billion this year, $3.9 billion of it on sports, against Kalshi's own claim that the cohort is 3.14% of volume. Les Bernal of Stop Predatory Gambling called the design "a video game type experience" aimed at young people. Now the product carries a Grand Slam's endorsement, in the state whose attorney general is suing it, six weeks after she filed.

If the Second Circuit rules for Kalshi, all of this becomes retroactively sensible business. If it rules for New York, the USTA will have spent a summer taking money from an operation a court has said cannot legally take bets in Queens. The USTA does not appear to have priced that risk. It has done this before.

Watch