⦿ Executive Snapshot

• What: Kalshi and Polymarket continue to operate in India despite a federal ban on online money games.
• Who: Kalshi, Polymarket, India's technology ministry, and CFTC.
• Why it matters: The actions of these platforms underline the challenges of regulatory enforcement in emerging markets and the potential for significant economic activity in prediction markets.

⦿ Key Developments

• Kalshi has raised significant capital and aims to expand into 140 countries, with India as a priority market due to high user demand.
• The new "Promotion and Regulation of Online Gaming Rules" (PROGA) imposed a blanket ban on online money games in India as of May 1, 2026.
• A single Indian Premier League cricket match on May 7 drew over $27 million in trading, showcasing the lucrative potential of the market.

⦿ Strategic Context

• India's regulatory environment shifted from grey to clear with the implementation of PROGA, impacting local and foreign operators differently.
• The enforcement gap in India raises questions about the authority of regulators to stop CFTC-registered exchanges or crypto-native platforms from operating.

⦿ Strategic Implications

• Immediate implications include potential pushback from regulators as international platforms challenge local laws, risking legal confrontation.
• Long-term, the situation may lead to a more fragmented regulatory landscape for prediction markets, affecting how platforms operate across borders.

⦿ Risks & Constraints

• There is a significant risk of regulatory backlash as Kalshi and Polymarket operate against the explicit ban, which could lead to forced shutdowns.
• The reliance on dollar-pegged stablecoins for settlement could pose additional risks if regulators target this infrastructure as a threat to economic integrity.

⦿ Watchlist / Forward Signals

• Future enforcement actions by Indian regulators could signal a shift in the operational landscape for prediction markets.
• The success or failure of Kalshi's expansion efforts in India and Brazil will provide insights into the viability of prediction markets in restrictive jurisdictions.