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Prediction markets are facing increased scrutiny from state regulators and traditional sportsbooks over their sports-based contracts. In response, leading platforms Kalshi and Crypto.com, along with Robinhood, Coinbase, and Underdog, recently launched the Coalition for Prediction Markets to defend and promote the industry’s political and regulatory interests.
The issue: sports predictions and legal challenges
Prediction markets allow trading on events across politics, entertainment, climate, technology, and sports. Sports contracts are at the center of the controversy.
The American Gaming Association (AGA), which represents major casinos such as Caesars and MGM, has labeled sports prediction markets as “sports betting” in advertising campaigns. Several states, including New York, Nevada, Massachusetts, and Connecticut, have also issued legal challenges arguing that certain prediction markets fall under state gambling laws.
At the same time, sportsbooks like Fanatics, FanDuel, and DraftKings are entering the prediction market space. DraftKings and FanDuel have already launched their own regulated prediction market platforms, while Fanatics launched Fanatics Markets. These moves allow traditional sportsbooks to compete directly with Kalshi and Polymarket while remaining compliant with CFTC oversight.
Unlike sportsbooks, prediction markets operate under federal oversight by the Commodity Futures Trading Commission (CFTC), allowing them to run across all states without state-level licenses. Only 39 states have legalized sports betting, which creates a patchwork regulatory landscape.
How the Coalition for Prediction Markets will help
Business coalitions act as lobbying vehicles, pushing policymakers in Washington to advocate for shared interests. The Coalition for Prediction Markets aims to:
- Promote federal regulation via the CFTC to clarify legal authority over prediction markets.
- Fight state-level legal actions that attempt to restrict operations.
- Establish integrity standards, including anti-insider-trading measures, to protect market credibility.
Sara Slane, Kalshi’s head of corporate development and an executive board member of the coalition, said: “Americans deserve clarity, not 50 conflicting interpretations.” She emphasized that a unified industry voice is necessary to ensure access and consistency nationwide.
Industry players and missing members
The coalition currently includes Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog. Notably absent is Polymarket, the largest global prediction market, which is preparing to reenter the US with CFTC-compliant contractsbut has not joined the coalition. Polymarket and Kalshi remain rivals, though their political interests align, making future collaboration potentially pivotal.
New legislative and prediction market developments
A federal bill introduced in Congress, the Public Integrity in Financial Prediction Markets Act of 2026, would target insider trading risks in prediction markets. Kalshi’s CEO has publicly supported the measure, emphasizing that insider trading is a financial crime.
Prediction markets are also gaining mainstream financial visibility. Kalshi recently partnered with Dow Jones and CNBC to provide real-time data to media outlets, signaling broader recognition of these markets as a source of sentiment and forecasting insight.
