The World Cup has been a sports betting bonanza for Kalshi.
Since the soccer tournament started, Kalshi says it has set new trading records, taking in more than $25 billion in sports wagers.
Compare that to the $4 billion analysts are expecting online sportsbooks like DraftKings and FanDuel to log in bets across all 104 matches.
The disparity is fueling skepticism from sportsbook advocates over Kalshi's position that it is not a sports gambling app.
To the sports betting industry, Kalshi and other prediction market operators have found a legal backdoor to grow sports betting without paying state gaming taxes. Additionally, Kalshi's app has effectively lowered the sports betting age from 21 to 18 and entered states where betting on sports is illegal, like California and Texas, thanks to the Trump administration's endorsement of Kalshi's argument that it is something other than a sports gambling site.
Kalshi says, technically, it is a federally regulated financial product, not a sports betting site. On Kalshi, bettors wager against each other, rather than betting against "the house," like with sportsbooks. The company does not make money when bettors lose. Instead, it tacks a fee onto every transaction. Kalshi also points to all the other things it allows people to bet on, like elections, the president's word choice and the week's top-streaming movie on Netflix.
Kalshi spokeswoman Elisabeth Diana adds that, unlike sportsbooks, Kalshi does not restrict bets or ban people who are consistently big winners.
"Just like the stock market, you can exit your position at any time. It's a fairer, less predatory platform," Diana said.
Whether Kalshi is an unlicensed sportsbook or a totally new type of finance app may seem like a pedantic distinction, but the question is at the center of more than 20 pending federal lawsuits, with billions of dollars of tax revenue and the future of the fast-growing prediction market industry at stake.
"From a bettor's standpoint, Kalshi and sportsbooks are basically identical," said Victor Matheson, an economics professor at the College of the Holy Cross who specializes in sports gambling. "I don't see why they should be regulated and taxed any differently than sportsbooks."
Kalshi may be trying to distance itself from sports betting apps, but it is also trying to lure people away from them.
A recent digital ad campaign across YouTube, Facebook and Snapchat featured a sunglasses-clad monkey wearing soccer jerseys in speeding cars and lounging in bars with disco balls with the caption: "Life after switching from predatory sportsbooks to using Kalshi."
After NPR asked Kalshi about the ads, they appear to have been removed from each company's searchable library of digital advertisements.
Is Kalshi a 'sportsbook with a small prediction market business attached?'
Kalshi does not see itself as a sports betting app, but sports are, by far, the most popular type of wagering on Kalshi, typically accounting for about 80 to 90% of all bets placed on the site.
One popular type of betting is when traders put money down on what team will win or lose and on "parlays," which Kalshi calls a "combo," or bets on multiple things happening in one game. Then there are wagers on points scored in the first half of the game, an individual player's performance, what sports announcers will say live and endless other possible outcomes.
"Kalshi is a sportsbook with a small prediction market business attached to it," said David Forman, the vice president of research at the American Gaming Association, an industry group representing casinos and betting sites.
"When people are betting on sports they should realize it's an entertainment product and they are ultimately going to lose money, but they should have a good time doing it," Forman said. "Whereas these products are out there pitching themselves as financial investments, which is irresponsible."
The association's data tracking shows the past 10 months have seen the biggest slowdown in legal sports betting since it became widely available in the U.S. nearly a decade ago, according to Forman. During the same time period, prediction market apps like Kalshi and Polymarket have been on a growth tear. Last year, Kalshi traders' monthly betting totalled around $5 billion. Last month, more than $30 billion was bet on the platform.
So far though, the prediction market insurgents have not meaningfully cut into sportsbook profits. That's because the slump has been in the amount of money bet, known in gambling industry lingo as "the handle," which is not where sportsbooks turn a profit. Sports betting sites make money by taking a portion of bettors' losses. DraftKings and FanDuel have both reported upticks in quarterly profits in recent months, as bettors increasingly turn to smaller-dollar bets and the companies cut back cash bonuses, according to Brad Allen, a gambling industry analyst at Eilers & Krejcik Gaming.
"Kalshi and Polymarket are signing up customers in states where sports betting isn't allowed, like California and Texas, and signing up 18-year-olds in states where the legal age to sports bet is 21," Allen said, "It's broadly new money, money sportsbooks couldn't touch."
But even as the legal sports betting industry attacks Kalshi and Polymarket, sportsbook companies also are trying to get in on the action. DraftKings and FanDuel have launched their own prediction market services.
"They see it as a way of saying, 'well, now we can have a crack at states like Texas," Allen said. "It's an expansion opportunity for them, but Kalshi is dominating those places."
Prediction markets avoid $4 billion in taxes a year
DraftKings and FanDuel investors might not be feeling the pinch from prediction markets yet, but executives at those companies are still screaming foul about something else: Taxes.
Sportsbook companies have to secure licenses to operate in states where sports gambling is permitted, in addition to paying taxes on gross gaming revenue — the amount of money they make after bettor wins are paid out.
Those taxes range from 6.7% in Nevada to 51% in New York.
Across the country, sports gambling operators paid out about $4 billion a year in taxes, according to an NPR analysis of the most recently available state tax figures of the more than 30 states where mobile sports betting is legal.
In New York, most of the revenue from sports betting sites aids public education. In Colorado, the taxes finance water preservation programs. Sports gambling taxes in Illinois help support the construction of new roads and bridges.
In the state litigation against Kalshi, evading these taxes is often prominently highlighted.
"Prediction markets circumventing state gambling taxes – even if, to a customer – the product is indistinguishable from sports betting – was bound to get a reaction from state governments that feel cheated," Danny Funt told NPR. He researched the sports betting industry in his recent book Everybody Loses: The Tumultuous Rise of American Sports Gambling.
"Also bear in mind, of course, that the taxes aren't just revenue – they also in some cases go to fund gambling addiction services, and so prediction markets aren't contributing to that even if they are almost certainly contributing to rising gambling problems," Fund added.
Behind the scenes, Kalshi is advocating that more states find a middle ground, as North Carolina recently did, by passing a law that imposes a tax on prediction markets. The rate there is 6%, versus 23% for online sportsbooks – though Kalshi claims it will ultimately pay a comparable amount in taxes because of how the tax is structured.
Kalshi spokeswoman Diana said: "We comply with all corporate tax laws and believe in responsible state taxation, even as a federally regulated derivatives exchange."
Trump's embrace faces growing state backlash
Not all states are playing nice. Minnesota enacted a law in May banning prediction markets. A court in Massachusetts has prohibited people from sports betting statewide on Kalshi, as did a judge in Michigan. Arizona has filed criminal charges against Kalshi, though a federal court has temporarily paused them.
Legal experts expect a case to eventually make its way to the U.S. Supreme Court, which could affirm Kalshi's novel legal designation, or strike it down completely.
"We spent four years working with the government to become federally regulated. We comply with all laws and are confident in our legal position," Kalshi's Diana said.
Under President Trump, the Commodity Futures Trading Commission, which regulates "event contracts" including Kalshi, has been fighting back, filing lawsuits against nine states, including Illinois and Arizona, that have attempted to regulate prediction markets.
Trump's eldest son, Donald Trump Jr., has equity in both Kalshi and Polymarket and is an advisor to each company.
Matheson, the economist at the College of the Holy Cross, says the federal government's embrace of the prediction market sector could be radically reversed if Democrats take the White House in 2028.
To him, prediction markets are no different than any other "illegal sportsbook hiding under a different name," he said.
"If I were just some guy in a smokey back room of a bar doing what Kalshi and Polymarket are doing," Matheson said, "I'd be in jail."
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