18-Year-Olds Put $5.4 Billion Into Kalshi Sports Bets – A Federal Court Just Called Them Bets

Key Points

• According to CNN, 18 to 21-year-olds have placed bets worth $5.4 billion on Kalshi in 2026, out of which $3.9 billion was wagered on contracts associated with sports.
• The Ninth Circuit Court of Appeals, in its unanimous decision, delivered on 28 August, held that contracts related to sports events are likely to be outside the ambit of regulated swaps under federal law, thereby paving the way for gambling regulations in Nevada.
• The CFTC is finalising rules that keep the minimum trading age at 18, while rival platform Novig launched this month with a voluntary 21-plus policy after receiving CFTC approval in June.

How would you describe something that allows an 18-year-old to gamble on multiple sports wagers using their mobile phone, where the bets cannot be placed in any licensed sports betting facilities across the nation, are worth billions of dollars in transactions and are expressed using terminology of financial instruments? On 28 August, CNN did an analysis and concluded that teenagers aged between 18-21, for whom it is illegal for them to partake in most forms of gambling within the U.S., have been trading an estimated amount of $5.4 billion on Kalshi alone this year. Soon after, the 9th Circuit Court of Appeals issued a unanimous decision, voting 3-0 that the sports events contract offered by Kalshi may very well not be regulated under federal law.

The Number Kalshi Did Not Publish

Kalshi did not release this data voluntarily. CNN, which holds a data partnership with Kalshi, conducted its own analysis after the platform declined to disclose exact spending figures for the 18-to-21 age cohort. What Kalshi did confirm is that users in that age group account for 3.14 per cent of its overall trading volume. Kalshi has seen more than $173 billion in total trading volume so far this year, according to publicly available data from investment firm Paradigm. Cross that figure against the 3.14 per cent share, and the $5.4 billion estimate emerges independently.

That matters because Kalshi’s silence was not neutral. A platform that loudly promoted its responsible gambling safeguards, including deposit limits, behavioural monitoring tools, and a pledge of $2 million to support the National Council on Problem Gambling’s Financial Trader Health and Safety Initiative, did not surface the youth trading figure until a news organisation calculated it. Those safeguards exist on paper. Whether they hold against $5.4 billion in youth activity is a different question entirely.

Sports Contracts Are the Engine – That Is Also the Problem

The CNN analysis found that Kalshi users between 18 and 21 have traded an estimated $3.9 billion in sports contracts and parlays this year, which make up about 80 per cent of Kalshi’s overall volume. That concentration did not happen by chance. Gaming industry consultant Jonathan Michaels told CNN: “Normally you’d have a big summer lull, but the World Cup changed that completely. Prediction markets will also see record numbers this fall with the football season, and that’ll certainly trickle down into college-age students.”

Sports parlays, structurally identical to the multi-leg bets marketed aggressively by licensed sportsbooks to adults aged 21 and above, are what draws younger users in. On Kalshi, an 18-year-old can access the same mechanics with no state gaming licence required, no tribal compact involvement, and no gaming tax applied. Bank of America analyst Julie Hoover described Kalshi as one of the “fastest growing non-AI companies” in the US, with weekly trading volume surging to more than $3 billion from roughly $100 million a year ago. Sports contracts built that number, and the same contracts are now at the centre of a federal legal challenge that did not exist twelve months ago.

A Federal Court Called Them Gambling – Here Is What That Means

The Ninth Circuit ruled that Kalshi’s sports event contracts are likely not federally regulated swaps, clearing the way for Nevada to enforce its gaming laws and opening the door to state-level enforcement across nine western states. The ruling conflicts directly with a Third Circuit decision from April that sided with Kalshi against New Jersey, creating a circuit split that substantially raises the prospect of US Supreme Court review.

Nevada Attorney General Aaron Ford called the ruling a major victory: “Kalshi sought to sidestep Nevada’s gaming laws by claiming its sports wagering products were federally regulated financial instruments beyond the reach of state regulators.” Kalshi’s spokesperson maintained that federal law still prevents states from regulating a federally licensed exchange, and the company said it intends to seek further review. According to the American Gaming Association, there are 21 states and nine out of 12 US federal circuits with active litigation against prediction markets including Kalshi and Polymarket. The Ninth Circuit ruling now sets binding precedent across California, Arizona, Oregon, Washington and six other western states, none of which have exhausted their enforcement options.

The Loophole That Built the Business

Prediction market platforms are open to anyone aged 18 and above because they operate under federal financial market regulation through the Commodity Futures Trading Commission, rather than state gambling law. Most licensed sportsbooks and casinos require users to be 21. AGA president Bill Miller told CNN: “Most parents and grandparents don’t realise that the ‘prediction markets’ are offering a backdoor into sports-betting in jurisdictions where the legal betting age is 21. This means their freshman son or daughter is prohibited from entering legal sportsbooks, but now they can just pull out their phone and use Kalshi to bet on football.”

Prediction markets’ proponents may also note that 18-year-olds are free to engage in stock-market transactions and stake their money on the more speculative CFTC instruments. This statement carries a bit of weight when talking about election or economic contracts; however, it becomes rather stretched when one talks about parlaying on NFL Sunday for a 19-year-old who is not allowed to enter the next-door sportsbook. As Bernstein forecasts, the volume of prediction market trading will hit $240 billion by 2026, which means a 370% growth from 2025 to $1 trillion annually by 2030. These estimates presuppose regulatory consistency, but the recent Ninth Circuit’s decision introduces some uncertainty concerning the sports segment that dominates this field.

Rivals Have Already Picked a Side

Novig secured CFTC approval in June and launched its prediction site this month with a 21-plus policy. The company has already seen $450 million in trades and inked a partnership deal with the New York Mets. Novig CEO Jacob Fortinsky told CNN: “We listened to the concerns of the NCAA and other professional sports leagues. We want to be a good partner to these leagues and be a good steward in the prediction space.” He added that the public has “valid concerns” that college-age adults are “particularly susceptible to irresponsible trading behaviour” and that “we don’t want that to be a component of our business.”

Fanatics made the same call earlier, restricting its prediction market platform to users 21 and above. The NCAA, NFL, NBA and PGA Tour have each formally urged the CFTC to raise the minimum trading age from 18 to 21, citing consumer protection concerns around sports-related products. The CFTC declined, and is instead finalising rules that keep the 18-plus threshold intact. A pending congressional bill, the Prediction Markets Security and Integrity Act of 2026, would raise that federal minimum to 21 and tie platform access in each state to a state-approved wagering programme with federal sign-off, though it has not yet passed.

Expert Analysis: $2 Million Against $5.4 Billion Is Not a Protection Policy

Here is the controversy most coverage has avoided. Kalshi built its position, controlling approximately 90 per cent of US prediction market volume, on a product a federal court has now described as likely gambling, sold inside a regulatory gap that lets an 18-year-old access sports parlays three years before any licensed operator would legally serve them. Against that, the company’s visible youth protection response is a $2 million donation to a problem gambling council. On a $22 billion valuation and $173 billion in annual trading volume, that reads as a calculation, not a commitment.

We recognise the counterargument: 18-year-olds can legally buy stocks and trade options with far greater financial exposure than anything on Kalshi. That is factually true. The issue is not that younger adults face financial risk; it is that Kalshi’s sports parlay product is structurally indistinguishable from sports betting, which regulators and lawmakers spent years deciding should carry a higher age threshold. Calling it a financial instrument does not change what it does in practice, and three federal circuit judges agreed on that point last week.

The Ninth Circuit ruling and the $5.4 billion figure arrived together for a reason. One reveals the scale of the exposure; the other defines its legal character. What happens next at the Supreme Court, at the CFTC, and in Congress will determine whether this was a pressure point Kalshi absorbed or the moment the regulatory ground began to shift permanently beneath it.