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- Kalshi says filing was “intentionally broad”
- Prediction markets are regulated as financial assets but scrutiny is growing
- LaLiga hopes Polymarket will expand US presence
Prediction market operator Kalshi has classified itself as a ‘gambling’ operator in a US trademark filing, despite public protestations and intensive lobbying efforts to prevent its service from being legally designated as such.
According to Sportico, the company attempted to file the term ‘prediction market’ last year with the United States Patent and Trademark Office (USPTO), which has very specific industry classifications for organisations to use in their application.
Kalshi filed for protection in several financial categories as well as multiple betting classifications.
In a statement, Kalshi said its trademark was “intentionally broad” and designed to protect itself against activity in adjacent markets.
It rejected suggestions that its filing characterised its business as a betting company. However, Sportico notes that this strategy might be incompatible with USPTO guidance, which says any submission that does not reflect the nature of the business is “unacceptable”.
Prediction markets see customers exchange contracts tied to the result of a particular event, with their value appreciating or depreciating accordingly.
These markets operate under federal commodities and derivatives regulation, which is overseen by the Commodity Futures Trading Commission (CFTC), rather than traditional state gambling laws. This means the service can be offered in US states where betting is not legal.
Prediction markets have exploded in popularity over the past 12 months, attracting the attention of politicians who believe it to be a form of unregulated betting that should be subject to oversight by individual states.
Several states have already filed civil lawsuits against prediction markets in a bid to force them to file for betting licences that would impose more stringent restrictions and reduce the risk of market manipulation. Arizona went one step further by filing criminal charges against Kalshi, accusing it of running an illegal sports and election betting operation.
Meanwhile, two US senators have proposed legislation that would ban prediction markets from offering contracts related to sport.
Kalshi, Polymarket and others are intensifying their lobbying efforts to prevent reclassification, which would limit their reach and place additional obligations on them.
This hasn’t stopped sports properties from signing exclusive partnerships with major exchanges, despite concerns that such markets are a form of unregulated betting and could be open to abuse.
Major League Soccer (MLS), which has an exclusive partnership with Polymarket, had to ban two players for betting on matches earlier this year. However, critics argue prediction markets are even more open to manipulation and insider trading than traditional gambling.
Major League Baseball (MLB) has struck a multi-year deal reportedly worth US$150 million with Polymarket. As per the terms of its contract, both parties will work on establishing an integrity framework that will restrict markets that are at risk of manipulation, including individual pitches, manager decisions and umpire performance. Despite this, senator Richard Blumenthal told Front Office Sports (FOS) that the deal was “astonishing and appalling”.
LaLiga is the latest property to associate itself with Polymaket, becoming the first major European soccer league to agree an exclusive partnership in the US. In addition to direct financial gain, LaLiga believes predictions markets will encourage more fans in the country to follow its matches in real time, expanding its audience in a competitive soccer market and driving up the value of its media rights.
Meanwhile, Polymarket hopes another partnership will drive activity and add further legitimacy to its platform.
“Our goal is to give fans a more expressive way to follow the game, where opinions on players, matches, and season outcomes can be reflected in real time,” said Shayne Coplan, founder and chief executive of Polymarket. “Partnering with LaLiga brings that level of interaction to one of the most passionate global fanbases and introduces a new, more dynamic way for North American audiences to engage with the league.”
LaLiga also has regional partnerships with several bookmakers around the world and permits its clubs to sign shirt sponsorships with betting firms. This contrasts with the Premier League, which has no official gambling partners, and its clubs will be banned from agreeing front-of-shirt sponsorship deals from next season. They will, however, be permitted to sell sleeve sponsorships and advertising board space.
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