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Gaming Edge’s TL;DR
- Federal and state pushback against prediction markets is building fast, with multiple bills and lawsuits threatening large swaths of event-based betting.
- This could mean new bans, tighter rules, or a legal showdown that reshapes where and how wagers are placed.
The rapid growth of prediction markets – led by platforms like Polymarket and Kalshi and joined by crypto and gaming firms – has drawn a wave of US legislative and legal responses.
Activity jumped from about $1.2 billion monthly in early 2025 to more than $20 billion a year later, with political and sports contracts gaining the most traction.
Lawmakers and state regulators cite concerns ranging from insider trading and market manipulation to bets on wars, assassinations, and elections.
Over half a dozen federal bills have emerged, including the STOP Corrupt Bets Act, Public Integrity in Financial Prediction Markets Act, and the Prediction Markets Are Gambling Act. States have also sued operators and halted services, arguing many contracts are effectively unregulated gambling.
As Kalshi’s communications head put it, the company says it’s a “regulated, nationwide exchange” and claims exclusive federal jurisdiction.
Supreme Court may make final decision on prediction markets
For players, the immediate risk is reduced access to certain markets – particularly political, military, and some sports contracts – and potentially stricter age and identity checks.
Operators may face higher compliance costs, criminal charges in some states, or requirements to change settlement systems and product design to avoid state gambling rules.
Financially, trading volumes could fall or move to less-regulated tokenized markets, while litigation and regulatory defense will increase costs for startups and established firms.
Coming up, expect a two-track fight over prediction markets: Congress debates sweeping bills while state courts press individual operators, likely sending major cases toward the Supreme Court over jurisdiction and whether these products are gambling or derivatives.
Based on reporting by Jesse Hamilton for CoinDesk.
