Kalshi asked the U.S. Patent and Trademark Office to classify its product under the gambling industry in a November trademark filing, even as CEO Tarek Mansour continues to argue publicly that his platform has nothing to do with sports betting.

The filing shows Kalshi tied its “prediction market” trademark application to “bookmaking services” and “sports betting and gambling tournaments.”

The company said its trademark strategy was “intentionally broad” and designed to protect the term from competitors in adjacent categories.

Kalshi’s Identity Crisis

The filing lands at an awkward time.

Kalshi is currently fighting lawsuits from Nevada, Massachusetts and Washington state, plus criminal charges in Arizona, all arguing its platform is an unlicensed gambling operation.

The company’s core legal defense rests on being a CFTC-regulated financial exchange, not a sportsbook.

A George Washington University study published in February found that Kalshi contracts carry an approximate average negative 20% return when including fees.

The platform’s app features parlays, moneylines and point spreads, the same product architecture found in traditional sportsbooks run by DraftKings Inc. (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT).

California Rejects Federal Preemption

Separately, California Attorney General Rob Bonta told Business Insider he “firmly disagrees” that CFTC oversight of prediction markets preempts states’ ability to regulate them, and that observers should not read too much into the fact they haven’t sued yet.

Bonta said his office has been “firmly engaged” on prediction markets and noted he has been in contact with his former chief of staff Evan Corder, who now lobbies for Kalshi.

California’s tribal gaming interests have already sued over prediction market expansion, and Bonta’s office issued an opinion last summer declaring daily fantasy sports illegal in the state.

Why It Matters For Investors

Bipartisan senators introduced the “Prediction Markets are Gambling Act” last week, which would ban sports-related prediction market contracts entirely.

FLUT and DKNG both rose on the announcement.

DraftKings shares are up nearly 3% today, but still down roughly 37% year-to-date as prediction markets have eaten into traditional sports betting market share.

If state-level legal pressure forces Kalshi and Polymarket to obtain gambling licenses or exit certain markets, the incumbents stand to benefit. DraftKings reports earnings April 30.

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