Prediction Markets
Event contracts, the exchanges that list them, and the running dispute between federal derivatives regulation and state gambling law over who is in charge.
The chief executives of Kalshi and Polymarket are expected at the White House complex on Wednesday alongside the chairs of the CFTC and the SEC, a day before a federal advisory committee sits down to discuss who actually gets to regulate event contracts. For the sportsbooks losing volume to those venues, that second meeting is the one that matters.
The Commodity Futures Trading Commission is running at least 20 insider-trading investigations drawn solely from referrals by Kalshi, yet has brought civil charges against just three prediction market traders so far, according to a New York Times investigation. The gap between referrals and enforcement is widening just as sports event contracts drive trading volumes to record highs.
The Nevada Council on Problem Gambling is set to terminate its affiliate membership with the National Council on Problem Gambling this month, citing a fundamental disagreement over the NCPG's two-year partnership with Kalshi. Michigan's gaming regulator has already walked, and other state councils are said to be weighing the same step.
The federal derivatives regulator has ordered a prediction market to stay open in the state trying to shut it down, and it did so before any court has ruled on the motion.
A Connecticut federal judge has rejected both halves of Kalshi's legal theory in a single order, finding its sports contracts are not swaps and that federal commodities law would not displace state gambling powers even if they were. The pause Kalshi has held since December is gone.
New York Governor Kathy Hochul has taken the state's $36 billion lawsuit against Kalshi to social media, accusing the prediction market operator of "turning cancer patients into prop bets" over its FDA drug-approval contracts. Kalshi's co-founder fired back within hours, and Harvard Medical School researchers have separately asked the CFTC to ban the markets entirely.
A Utah court has refused Kalshi's latest attempt to prevent a state from enforcing its gambling laws against the prediction-market operator, extending a string of legal setbacks that have repeatedly undermined the company's federal-preemption strategy at the state level.
Flutter's outgoing CEO Peter Jackson has confirmed FanDuel is content to act as a futures commission merchant directing users to third-party exchanges, positioning the operator ahead of a proposed CFTC rule that would restrict the market-making activities of exchange-affiliated firms. The strategy is forecast to generate $50 million this year, even as overall US performance falls short of plan.
Novig, the prediction market operator trading as Ludlow Exchange, has filed suit in the Southern District of New York against the state's gaming commission and attorney general, the latest legal flashpoint in a rapidly escalating state-by-state battle over whether prediction markets constitute illegal gambling. The complaint lands as the sector faces simultaneous legal pressure across multiple jurisdictions.
A senior Fanatics executive has publicly argued for stronger consumer protections in the prediction markets sector at the same moment the company is scaling its own event-contract offering, placing the operator in a position that is as commercially revealing as it is regulatory.
Three live bills in the 119th Congress are pulling federal policy on prediction markets in opposite directions: one would create a dedicated regulatory framework, while two others would reclassify event contracts as gambling outright. The outcome will determine whether platforms such as Kalshi and Polymarket operate as financial exchanges or face state-level enforcement.
Governor Kathy Hochul and Attorney General Letitia James have filed suit against Kalshi, alleging the prediction market platform has operated an unlicensed gambling business in New York since at least 2025, exposing users as young as 18 to betting products that state law reserves for those aged 21 and over. The action demands forfeiture of all illegal gains, consumer restitution, and fines triple the company's unlawful profits.