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Prediction markets have spent the past few years walking a tightrope between innovation and controversy. They promise a way to harness collective intelligence — crowdsourcing probabilities on everything from elections to the Super Bowl — but they’ve also drawn scrutiny from regulators who see something else entirely: unlicensed gambling.
Now, New York Assemblymember Clyde Vanel wants to tip that balance decisively. His newly introduced legislation, the Oversight and Regulation of Activity for Contracts Linked to Events Act, or the ORACLE Act, aims to ban a wide range of prediction markets in the state. If passed, it could become the toughest state-level crackdown yet on platforms like Kalshi, Polymarket, and others that blur the line between trading and wagering.
Vanel says it’s not about stifling innovation — it’s about accountability. “Prediction markets have wrapped wagering in new jargon and skipped the hard part: licensure and oversight,” he explained in a statement. “If you want to operate what is, in substance, a gambling platform, you need a license.”
The ORACLE Act’s core prediction market bans
At first glance, the ORACLE Act looks sweeping — and it is. The bill would prohibit platforms from allowing New York users to “open a speculative position” on several categories of events, including:
- Sports and athletic events
- Political outcomes
- Catastrophic events such as natural disasters or war
- Death markets involving individuals or public figures
- Security or financial markets
The measure takes things a step further by defining “athletic events” as individual games or discrete occurrences within those games — such as who scores first, who wins the coin toss or how many yards a quarterback throws. Predictions about long-term outcomes, such as a team winning a championship, might still be permitted.
In practice, though, it’s clear the bill intended to stop anything that looks or feels like sports betting without a state license.
The state’s case against prediction markets
Vanel’s argument hinges on consumer protection and public trust. He points to cases in which insiders have traded on embargoed information and instances in which markets appeared to move in response to the actions of a single influential individual.
To him, the issue isn’t simply semantics — it’s responsibility.
“These platforms claim to be something new, but they’re just gambling without the guardrails,” he said. “States can’t look the other way.”
New York regulators have already acted on that belief. Earlier this year, the New York State Gaming Commission sent cease-and-desist letters to Kalshi and Robinhood over their sports prediction markets. Kalshi responded by suing the state, arguing that its markets are legal under federal law because the Commodity Futures Trading Commission regulates them.
That lawsuit is still ongoing, and the ORACLE Act appears designed to strengthen the state’s hand. It explicitly declares that prediction markets tied to sports are off-limits under New York law, regardless of federal oversight.
The legal battle over prediction market authority
The CFTC has long claimed jurisdiction over event-based contracts, meaning that federally regulated markets, such as Kalshi’s, can technically operate nationwide. That has created friction with states that see these platforms as skirting gambling laws.
The ORACLE Act could escalate that conflict. If New York passes it, the state would essentially assert that CFTC regulation doesn’t preempt local gambling authority. It’s a bold stance — and one that could force the courts to clarify a question that has lingered for years: Who actually gets to regulate prediction markets?
Attorney Stephen Piepgrass, who has worked extensively in gambling and financial regulation, said in a recent interview that the New York case may set the national tone. “What happens here will be watched closely by other states and by Washington,” he said. “If New York can carve out authority to regulate or even ban these platforms, others will follow.”
ORACLE Act compliance and penalties
Beyond the bans, the ORACLE Act includes a full slate of consumer protection measures that mirror those in the regulated gaming world:
- Age limits: Users must be at least 21.
- Self-exclusion tools: Players can set time and deposit limits or ban themselves entirely.
- Responsible gambling messaging: Platforms must prominently display addiction helpline information.
- Funding rules: Credit cards, loans, or gift cards cannot be used to fund accounts.
- Ad restrictions: No targeting minors or self-excluded users, no “risk-free” language and no push notifications promoting bets users haven’t engaged with.
- Transparency on outcomes: Platforms must show how results are verified and which sources are used to settle markets.
- Insider participation bans: Employees or anyone with nonpublic information are prohibited from trading.
Violations would carry significant penalties. The New York attorney general could issue fines of as much as $10,000 per violation and up to $1 million per day for continued illegal operation.
When the ORACLE Act would take effect
New York’s 2025 legislative session has ended, so the bill won’t be considered until Jan. 7, 2026. If it passes, the rules would take effect one year later — likely in 2027.
The timeline gives platforms some breathing room, but it also raises questions about their long-term strategies. Kalshi, DraftKings’ new “Railbird” prediction product, Robinhood, and Polymarket all have deep ties to New York, either through offices or legal registration. If the bill becomes law, they may be forced to move operations elsewhere or limit access for New York users.
DraftKings, for example, has announced plans to launch DraftKings Predictions, a federally regulated platform focusing on states without sports betting. The ORACLE Act could immediately shut the door on that plan in its own backyard.
How New York’s crackdown fits into a bigger trend
For every state regulator looking to rein in prediction markets, there’s a growing crowd of users and companies pushing for legitimacy. A Kalshi-commissioned survey found that nearly 90% of voters believe Americans should have access to prediction markets. Supporters argue that these platforms are analytical tools, not gambling, since they aggregate information much like financial markets do.
Public demand isn’t slowing. Platforms like Polymarket have surged in popularity among crypto traders and political enthusiasts, while mainstream operators like DraftKings and FanDuel explore ways to merge sports analytics and market-style trading.
Whether New York’s legislation cools that momentum or simply pushes it underground remains to be seen.
