As the fervor of March Madness approaches, Kalshi, a notable prediction market operator, has introduced a novel betting model in the form of single-game event contracts for this week’s NCAA conference tournaments. These contracts pose a simple yet engaging question to sports enthusiasts: which of two competing teams will progress to the next round? This format closely mirrors traditional single-sports bets, effectively transforming speculative sports outcomes into actionable investment opportunities.

Kalshi’s innovative betting structure is showcased through various markets, with one such market focused on whether California or Stanford will advance to the Atlantic Coast Conference quarterfinals. As of the latest updates, stakes in this market have soared past $55,000. This new betting model isn’t limited to future predictions like the eventual NCAA men’s champion—where choices between Duke and Auburn have attracted a whopping $2.5 million in stakes—but extends to immediate game outcomes, providing a thrilling “yes or no” dynamic for bettors.

The company’s strategic shift to these singles-like markets represents a significant pivot in sports betting, catalyzed by a recent self-certification notice to the Commodity Futures Trading Commission (CTFC) in February. This move aligns with their broader ambitions, as seen during the NFL season when their Super Bowl futures market morphed into a direct yes-or-no bet following the qualification of the Kansas City Chiefs and Philadelphia Eagles.

Regulatory Scrutiny Intensifies Amid Expansion

While Kalshi’s expansion into sports contracts has garnered attention, it has also prompted regulatory scrutiny. The Nevada Gaming Control Board (NGCB) took a pioneering step by issuing a cease-and-desist order against Kalshi, marking a significant regulatory challenge for the company. This order highlights alleged violations of multiple statutes and regulations concerning the offering of sports and political event contracts within Nevada.

The broader betting community, including stakeholders like the American Gaming Association (AGA), has expressed concerns, prompting a scheduled CFTC roundtable discussion later this month. The AGA’s participation underscores the industry’s vested interest in the regulatory landscape that Kalshi’s offerings could reshape.

DraftKings Prepares for Future Opportunities

In parallel, major sportsbooks are positioning themselves strategically amid the evolving market dynamics. DraftKings, through its executives, has initiated an application with the National Futures Association for a new venture dubbed DraftKings Predict. Jason Robins, CEO of DraftKings, cited by SBC Americas, emphasized the company’s proactive stance in exploring new opportunities, signaling a readiness to adapt and thrive in an anticipated regulatory environment that could welcome such innovative betting models.

As Kalshi prepares for the imminent NCAA tournament, the potential for more states to emulate Nevada’s regulatory actions looms, suggesting that Kalshi’s innovative betting formats could either redefine sports betting or encounter significant legal hurdles.