A decision, not a prediction
The previous six lessons described the product, its economics, its legal position, its integrity risks, its comparison with a sportsbook and its distribution. None of that tells a reader what to do, and the honest answer is that nobody knows how the American litigation ends. What a professional can do is decide under that uncertainty: build a position that survives more than one outcome, and know in advance which outcome triggers which move. This lesson is a framework for that, by role.
If you run a licensed sportsbook
Decide your posture before the court does. The three routes open to an operator, own an exchange, partner with one, or stay out, each have a cost, and the cost of choosing late is the highest. DraftKings chose to own, buying Railbird, a CFTC-designated exchange, in October 2025; FanDuel chose to partner, launching FanDuel Predicts with CME Group that December. Owning requires designation or an acquisition; partnering requires a negotiation on the four terms in lesson six; staying out requires a plan for the customers in states you cannot serve.
Separate the states. In states where you are licensed, offering exchange contracts to your own customers puts your licence in front of the regulator that granted it, and several regulators have said so: Ohio and Massachusetts warned their sportsbook licensees that offering or partnering on sports event contracts would bear on their suitability or their licence, and in November 2025 Nevada's regulator accepted the surrender of Flutter's and FanDuel's licences and the withdrawal of DraftKings' applications, saying their plans for sports event contracts were incompatible with a place in the state's gaming industry. In states where you are not, the contract is the only product you can sell. FanDuel drew the line close to there, offering sports contracts only in states where online sports betting is not yet legal, except on tribal lands, and it is a defensible line as long as it is drawn deliberately and documented.
Hedge, if you can. The most valuable use of an exchange for a bookmaker is not distribution but risk. A book with a large liability on a game can lay it off on a liquid exchange at a better price than any other channel, and an operator that negotiates that right in a partnership has bought something real regardless of how the litigation ends.
Prepare the compliance function for an audit it has not had. If you distribute contracts, your responsible gambling, advertising and customer-identification processes will be tested against a product they were not designed for. The gaps are known: the 18 to 21 age band (the largest US exchange, Kalshi, admits customers from 18 while most states set 21 for sports betting), the customers in states that have banned betting, the affiliate promotions that do not fit any existing rule. Close them before a regulator opens them.
If you run an exchange
The customers you cannot identify are the customers who will cost you the venue. Every integrity failure in lesson four, and every enforcement action in lesson three, runs through identification. A regulated exchange has it; a crypto-native venue serving the world does not; and the market that grows is the one regulators can hold to account. Building the compliance function that a gambling regulator would recognise, even where the law does not yet require it, is the single investment with the highest option value.
Join the integrity structures before you are made to. Reporting suspicious activity to sports bodies, sharing alerts with the associations that pool them, and signing data and integrity agreements with leagues cost little and buy the argument that an exchange is a responsible participant in sport rather than a parasite on it. Kalshi's August 2026 deal with Genius Sports, under which it takes part in the data company's information-sharing processes and restricts certain market types, is an example. The sportsbooks have made that argument for years; it is available to exchanges for the price of joining.
Do not list what a participant controls. The manipulable-market boundary in lesson four is the one that gives regulators their best examples. Contract selection is the cheapest integrity tool an exchange has, and the venues that have used it loosely have supplied the case against the whole category.
Model the state-by-state outcome. A win for the states does not close the exchange; it geofences it. An exchange that knows today which markets it would withdraw in which states, and has the technology to do it in a week, has a business under every outcome. One that has to design that after a ruling does not.
If you are a supplier, a data company or an affiliate
A supplier of pricing, data or content to an exchange is, in the states' reading, supplying an unlicensed gambling operator. Nevada's regulator has told all its licensees, not only sportsbooks, that partnering with an entity offering sports event contracts in another state without complying with that state's rules may lead to discipline and call their good character and associations into question, and a supplier with licences in twenty states should treat that as a live risk rather than a rhetorical one. The practical mitigations are the ones lesson six sets out for partnerships: contractual exit, geographic carve-outs and a clear allocation of responsibility if a state acts.
Affiliates face the same question with less protection. Promoting exchange contracts to customers in a state that treats them as illegal betting is promoting illegal betting, and affiliate licensing regimes apply: in Pennsylvania, for example, an online gaming affiliate paid a revenue share must be certified by the gaming board and one paid a flat fee must be registered, so the affiliate has an approval of its own to put at risk. The Marketing Compliance course's framework for approving, monitoring and terminating affiliates applies directly; the missing step is deciding, in advance, which states an exchange promotion may target.
If you are a regulator
Decide what you are protecting. The states' case has three components: revenue, exclusivity for licensees and consumer protection. They are argued together and they are not equally strong. Revenue is a fiscal interest the public does not weigh heavily; exclusivity is a commercial interest the licensees weigh heavily and the public does not; consumer protection, particularly the age gap and the absence of harm-prevention obligations, is the argument closest to what the courts ruling for the states have relied on: the Ninth Circuit, upholding Nevada, pointed to the state's comprehensive regulatory regime and accepted that sports contracts create risk "largely for ordinary consumers, where none previously existed". A regulator that leads with the third and treats the first two as consequences is in the strongest position.
Build the bridge you may need. If the exchanges win, a state that has a licensing route for exchange-style products under its own law has a way of bringing them inside the tent, with tax, age limits and obligations. Britain's licensed betting exchanges are the template: its regulator has said current prediction market products would appear to need the betting intermediary licence the exchanges hold. A state whose only tool is prohibition will find, if prohibition is preempted, that it has no tool at all.
Watch the demand side. South Korea blocked Polymarket and also pursued its users: police, finding that the platform held no list of Korean customers, identified traders from the public record of blockchain transactions, booked 26 people for illegal gambling and by September 2026 had referred 18 to prosecutors, although no Korean court has yet ruled. That showed that a public blockchain identifies its users after the fact. It is an enforcement lever that works where the platform is out of reach, and it changes the calculation for customers in a way a domain block does not.
If you are an investor or an analyst
Value the product under three scenarios and weight them. A full exchange win produces a national, lightly taxed betting product with structural cost advantages and the incumbents forced to compete on its terms; the exchanges are worth a great deal and the sportsbooks' margins compress. A full state win produces a product confined to non-sport events, which is a real but small business, and the sportsbooks' 2025 moves into exchanges, by acquisition and partnership, become expensive options that expired worthless. A split decision, which is where the appeals courts stand today, produces something in between, with years of state-by-state litigation, which favours the operators with the compliance functions and legal budgets to run it.
The number to watch is not volume, which on Pew Research Center's analysis rose from under $1 billion a month on Kalshi and Polymarket combined in July 2024 to $53 billion in July 2026 through court wins and losses alike, but the proportion of volume from sports. An exchange whose volume is mostly sport is a sportsbook with a legal argument. One whose volume is mostly economics, politics and events has a business the states cannot touch. Public data lets you calculate the ratio, and it has moved sharply toward sport: political markets were 90% of Kalshi's volume around the 2024 election, before it listed sports, and by July 2026 sports was the most traded topic on both Kalshi and Polymarket by a large margin.
The question to keep asking
Every decision in this framework comes back to a question that the course has tried to keep open: is an event contract on a game a bet? The exchanges say no and have a federal designation to point to. The states say yes and have a definition of gambling that has never needed a court to explain it. The customers do not care what it is called. The professional's job is not to have an opinion on the label but to have a plan for both answers, and to know which of the two would change the plan.
What to take from this course
A prediction market is an exchange on which customers trade a binary contract with each other, and every property of the product follows from that: price is probability, liquidity is quality, the venue earns a fee rather than a margin, and the risks are resolution, manipulation and insiders rather than liability. The legal fight is jurisdictional, between federal derivatives law and state gambling law, and the appeals courts have split, the Third Circuit for the exchanges and the Ninth for the states, joined by the Sixth in September 2026, with New Jersey asking the Supreme Court to take the question and the CFTC proposing in October 2026 to define event contracts, sports included, as swaps. The product reached its customers through brokerages, then sportsbooks, and it is now distributed by licensed sportsbook operators whose own regulators have warned them against it. Whatever the courts decide, the exchange model is inside the gambling industry now, and the professionals who understand it will be the ones asked what to do next.