Kalshi faces state courts over illegal gambling claims

Stocks recently hit record highs—led by the S&P 500 and Nasdaq—on AI-driven optimism, but mounting inflation and a looming Supreme Court fight over prediction-market operator Kalshi threaten that rally. April CPI was reported at 3.3% year-over-year, and a Cleveland Fed nowcast raised its April estimate to 3.58%, a level that could discourage Fed rate cuts and even prompt hikes, which would be negative for equities. Separately, Kalshi faces state-level gambling claims (with sports bets reportedly ~85% of activity and $25m in March Madness fees), and conflicting court rulings could send the matter to the Supreme Court; the outcome will shape whether prediction markets can legally scale as hedging tools. Traders are already using contracts on CPI and Fed decisions to hedge policy-driven volatility; broader legal clarity could legitimize these markets as complements to traditional inflation hedges.