You can find the latest legal updates on prediction markets here across rulings, bans, regulations and more. With the ongoing legal disputes and constantly moving regulations across prediction markets, this page has all you need to know regarding the prediction markets legal timeline.
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Here are the latest legal prediction markets updates. We'll continue to update this section regularly.
Legislative updates
May 13, 2026Federal
House Oversight Chairman confirms investigation into prediction markets is underway, subpoenas may follow
House Oversight Committee Chairman James Comer confirmed that an investigation into corruption and insider trading on prediction market platforms is in progress, following a push from Rep. Chris Pappas to subpoena internal records. The inquiry centers on whether individuals with access to classified national security information have used that access for personal financial gain through prediction market trades.
May 12, 2026State
New Mexico tribes sue Kalshi alleging prediction market violates tribal gaming sovereignty
Four New Mexico tribes and pueblos — the Mescalero Apache Tribe and the Pojoaque, Sandia, and Isleta Pueblos — filed a federal lawsuit against Kalshi, alleging the platform enables sports gambling on tribal land in violation of gaming compacts, federal Indian gaming law, and state law. The tribes argued Kalshi's operation deprives them of gaming revenues that fund schools and community services secured through hard-fought tribal compacts.
May 12, 2026Federal
CFTC files amicus brief in Ohio appeals court reaffirming exclusive jurisdiction over prediction markets
The CFTC filed an amicus brief in the appeals court battle between Kalshi and Ohio, arguing that the lower court took an overly narrow view of the agency's jurisdiction and asking the court to correct that error. Chairman Selig reiterated the agency's position that CFTC authority over CFTC-registered markets preempts conflicting state gambling laws.
May 12, 2026State
Minnesota prediction market ban bill advances toward Senate floor vote
HF 4437, which would ban prediction markets in Minnesota, advanced closer to a full Senate floor vote as the legislative session wound down. If passed by the full Senate and House, it would make Minnesota the first state to officially ban prediction markets outright.
May 7, 2026Industry
Kalshi valued at $22 billion after $1 billion Series F funding round
Kalshi reached a $22 billion valuation following the close of a $1 billion Series F funding round, cementing its position as one of the most highly valued fintech platforms in the country amid a period of rapid growth and intensifying regulatory scrutiny.
May 6, 2026State
Texas Lt. Gov. Patrick calls for eliminating gray areas that allow prediction markets to operate in state
Texas Lt. Governor Dan Patrick urged state senators to close regulatory gray areas that have allowed prediction market platforms to operate within state lines, reinforcing his long-standing opposition to expanded gambling and signaling potential legislative action in Texas.
May 5, 2026Federal
Federal judge converts Arizona TRO into permanent injunction, blocking criminal prosecution of Kalshi
A federal district judge in Arizona upgraded an earlier temporary restraining order into a permanent injunction, formally blocking the state from proceeding with criminal charges against Kalshi. The ruling concluded that federal law preempts state gambling statutes as applied to derivatives traded on CFTC-regulated markets — the first district-level merits ruling of its kind, and a significant escalation in legal momentum for the prediction market industry.
May 2, 2026Industry
Kalshi blocks minors from platform as part of expanded responsible trading safeguards
Kalshi announced new customer protection measures including age verification controls to block minors from accessing its prediction markets, framing the move as part of a broader commitment to responsible trading amid mounting regulatory pressure.
Bipartisan Sports Betting Ban Bill: Would bar CFTC-registered exchanges from listing contracts resembling sports betting or casino gaming. If passed, would moot all ongoing litigation by removing sports event contracts from federal jurisdiction entirely.
NY ORACLE Act: Would require state licensing for contracts on elections, sports, geopolitical conflicts, and natural disasters in New York.
Prediction markets are technically legal in all 50 states, as they operate under CFTC oversight.
That comes despite several states pushing back on legal grounds. Nevada has been the most aggressive, but has also been joined by New York more recently in attempting to block several prediction markets platforms. Other states have issued cease-and-desist letters to several operators as well.
It's always important to check whether a platform is available in your state or not.
Are There any Ongoing Legal Challenges Against Prediction Markets?
Yes, as of May 2026 there are multiple ongoing legal challenges for online prediction markets apps. These primarily involve a high-stakes jurisdictional battle between federal regulators and state gambling authorities, along with related issues around insider trading, market integrity, and proposed legislation.
The core dispute is whether event contracts qualify as CFTC-regulated "swaps" or "derivatives" or as unlicensed sports betting/gambling under state law.
The biggest battles are:
CFTC position: Platforms registered as Designated Contract Markets fall under the Commodity Exchange Act. States cannot enforce their gambling or sports-betting laws against them. The CFTC has aggressively defended this, filing lawsuits in April against Arizona, Connecticut, and Illinois to block their enforcement actions. It has also sought preliminary injunctions or temporary restraining orders halting state prosecutions.
State actions: At least 8+ states have issued cease-and-desist orders, filed lawsuits, or pursued criminal charges against Kalshi, Polymarket, and similar platforms. Arizona, for example, filed criminal charges against Kalshi in March for operating an unlicensed gambling business, though a federal judge quickly issued a TRO blocking that at the CFTC's request.
Other Active Challenges in Prediction Markets
Insider Trading and Fraud
In February 2026, the CFTC issued an advisory highlighting enforcement actions against traders who used material non-public information. Platforms like Kalshi have imposed penalties, but the CFTC is signaling it will police this aggressively under anti-fraud rules.
Congressional Legislation
Multiple bills introduced in March 2026 could reshape the industry, including the Prediction Markets Are Gambling Act banning sports/casino-style contracts on CFTC platforms, the PREDICT Act targeting insider trading, and others addressing manipulation, AI risks, or specific contract types. Hearings continue, with lawmakers questioning CFTC resources and overlap with sports betting.
Historical Platform-Specific Issues
Polymarket: Settled with the CFTC in 2022 for operating unregistered binary options. It has since relaunched in the US via no-action letters and approvals in 2025.
PredictIt: Resolved long-running CFTC litigation in July 2025 with an amended no-action letter allowing continued operation under new academic/nonprofit management and updated limits.
Kalshi: Has been the most litigious player, winning several key injunctions but facing ongoing state suits.
Prediction markets are an exciting way to trade on real-world outcomes, but it's important to stay in control of how you engage. Our Responsible Trading guide covers everything you need to trade safely – from setting deposit limits and taking trading breaks to recognizing warning signs and using self-exclusion tools when needed. If you or someone you know needs support, the National Problem Gambling Helpline is available 24/7 at 1-800-522-4700. Trade responsibly.
Blake is a Senior Sports Betting Expert at RotoWire, covering all aspects of the gambling industry but specializing in the regulatory, legislative and nuts-and-bolts side. For over a decade, Blake has been at the forefront of the gambling industry on the editorial and consulting side, prominently covering the rapid expansion of sports betting since the repeal of PASPA in 2018.
In his own time (not there is much), Blake roots for his favorite teams the Baltimore Ravens, Baltimore Orioles, Washington Capitals and Maryland Terrapins. You may also hear him touting his winning betslips on the NFL, MLB and NBA. For fantasy, his creed is taking RB back-to-back, but he still bears the shame of drafting CMC with the number 1 overall pick for the 2024 season, which resulted in perhaps one of the worst fantasy seasons in history. Outside of sports, he frequents the gym and the local golf courses.
@BlakeWeishaar