March Madness, one of the most heavily bet sporting events of the year, is expected to generate $3.1 billion in legal wagers through traditional sportsbooks, according to the American Gaming Association (AGA). In comparison, Kalshi’s futures contracts, which have now hit $249 million, represent roughly 8% of that total, highlighting the growing interest in alternative markets, which have defied being defined as “betting” at least in terms of legalese.

Kalshi’s markets were facilitated in part by its new partnership with Robinhood, announced only last Monday, making the impressive trading volume all the more so.

The collaboration has already led to significant engagement among sports fans eager to trade on game outcomes using future markets rather than traditional sportsbook odds, although it’s not clear what makes these markets tempting for users and preferable, in certain cases, over the traditional betting markets.

Kalshi Expands Integrity and Consumer Protection Efforts

Alongside this surge in activity, Kalshi has taken steps to reinforce both sports integrity and consumer protection, emulating the mainstream sports betting market to achieve both. The company recently partnered with IC 360, an organization dedicated to protecting the integrity of US sports, with a particular focus on college athletics. Kalshi is integrating IC 360’s ProhiBet system, which helps prevent individuals with close knowledge of the sports they participate in, such as coaches, athletes, and other members of staff, from placing bets or tipping others to place bets that could compromise competition fairness.

Kalshi is also working to enhance consumer protections, taking its cue from responsible gambling practices in the mainstream sports betting industry. The company plans to introduce tools that allow users to set deposit and spending limits as well as access third-party sources dedicated to tackling gambling-related harm.

Despite Kalshi’s rapid expansion, its business model has drawn scrutiny from regulators, industry groups, and tribal gaming operators. Critics question whether prediction markets should be classified as sports betting, which would subject them to stricter licensing and oversight. Challenges are ongoing, although Kalshi has been winning the battle against the Commodity Futures Trading Commission so far.

Consumer Protection and Sports Integrity Come into Focus

However, Kalshi has been able to legally differentiate itself from traditional sportsbooks by not setting any odds. Instead, users create and trade in yes/no markets. Essentially, users predict whether a particular team will win a game. Under current regulations, prediction markets have not been legally defined as sports betting, though challenges to this interpretation persist.

These prediction markets have also expanded to a range of other events, such as politics, entertainment, and even criminal proceedings, such as the case against Luigi Mangione.

Meanwhile, some industry players have been criticizing the advancement of such platforms on the one hand, but also trying to break ground into the vertical on the other. DraftKings, for example, has applied for a prediction market license, signaling broader interest in the space.

Kalshi and Robinhood’s latest venture represents a significant test of the viability of prediction markets in the U.S. sports betting landscape. Whether they can navigate regulatory hurdles will be their making or breaking.