The CEO of regulated US sports betting exchange Sporttrade has played down claims prediction markets are depriving US states of hundreds of millions of dollars in tax revenue.
When unveiling annual performance figures for the regulated US market last month, the American Gaming Association (AGA) suggested prediction markets – which are regulated at a federal level by the Commodity Futures Trading Commission (CTFC) – had deprived states of over $500m in sports betting tax revenue in 2025.
But speaking on a panel at the NEXT summit in New York, CEO Alexander Kane refuted the claims, suggesting most of the revenue for the likes of Kalshi and Polymarket is derived from sources which US states have “not contemplated”.
“Let’s talk about Kalshi specifically,” he said. “It’s clearly the market leader in every single category. It’s the best product, it has the most volume, the most institutional participation, most intermediation, most market makers, most markets and the most input.
“Where Kalshi makes the vast majority of its revenue is through: broker intermediation; not permitted or contemplated by any state regulator, individuals market making via API; not allowed by any state, and thirdly, institutions that are big enough to participate as institutions, which is, once again, not contemplated by the states.
“Take those three aspects of Kalshi and look at the massive pie of its revenue, which could be a billion dollars this year – I would say that $950m of that billion comes from those three pillars.
“States are saying: ‘It’s taking away from me; that is revenue that would be mine.’ But it’s not.”
Some state regulators, including those in Nevada and New Jersey, have turned to the courts to prevent prediction markets from operating within their boundaries.
But Kane said he was hopeful the states and the operators of these platforms could find a “middle ground”.
“I’m an optimist – it could work,” he said. “There could be a middle ground where you have a really great state-regulated market, where casinos and online sportsbooks can offer 10% harder product than even on these exchanges. The states aren’t stupid; they’re smart. They’ve just never really thought about this extreme problem.”
Philadelphia-based Sporttrade, which is licensed In five states – Arizona, Iowa Colorado, New Jersey and Virginia –currently operates as a betting exchange designed to provide its users with a stock trading-style feel for sports betting.
Last month, it submitted licence applications with the CFTC as it vies to become a federally regulated prediction markets platform.
The post Sporttrade CEO: Prediction markets are not depriving states of tax revenue first appeared on EGR Intel.
Alexander Kane insists federally regulated exchanges such as Kalshi and Polymarket drive volumes from sources “not contemplated” by states
The post Sporttrade CEO: Prediction markets are not depriving states of tax revenue first appeared on EGR Intel.