States push back against prediction markets
Polymarket
The real fight was over who gets to control sports wagering, federal market regulators or state gaming boards. Once prediction markets started pulling sports volume at sportsbook scale, states treated them less like a niche finance product and more like an unlicensed sportsbook inside their borders. That raised the stakes from routine compliance disputes to a test case over whether a CFTC pathway can override the state by state licensing system that protects incumbent operators.
-
Nevada made the conflict explicit in March 2025, ordering Kalshi to stop offering sports and election event contracts in the state, and later warning that offering these contracts could jeopardize a Nevada gaming license. That is a direct threat to casino and sportsbook groups that might otherwise want to distribute prediction products.
-
The backlash spread beyond Nevada. New Jersey sued over sports event contracts it viewed as unlawful gambling, showing that the issue was not just one hostile regulator but a broader state effort to keep gambling oversight inside existing gaming regimes. Internal research frames this as the key bottleneck to nationwide sports expansion.
-
Leagues moved the other way. The NHL signed Kalshi and Polymarket in October 2025, giving them official data and branding rights, and MLS followed with Polymarket in January 2026. That matters because league partnerships help prediction markets look more like a mainstream betting channel even while gaming trade groups argue they are sidestepping gambling law.
This heads toward a clearer split in the market. If federal preemption holds, prediction markets become a new national layer for sports wagering, with leagues, brokers, and exchanges plugging in above state gaming boards. If states win, sports event contracts get pushed back into the same licensed, state by state box that shaped DraftKings and FanDuel.