States want to shut prediction markets down.
Investors just doubled their worth.
Both are happening at once. Neither side is blinking.
The Legal Fight Is About Sports
A prediction market is a site that pays out when an event happens, like a sports game or a vote.
Seventeen states are now challenging Kalshi, Polymarket, Coinbase and Robinhood. They say sports bets on these sites are just gambling under a new name.
The federal Commodity Futures Trading Commission says no. The CFTC is the agency that sets the rules for swaps and other contracts, and it claims event contracts are its turf.
Six states are now in court with the CFTC over who gets to make the rules. Sports drives most of the trading on these sites today.
Minnesota went furthest in May. Governor Tim Walz signed a law making it a felony to run a prediction market in the state. The CFTC sued the same day to block it.
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The Real Growth Is Outside Sports
CME Group CEO Terrence Duffy said last month that the heat is mostly on sports. Bets on politics, the economy and money markets are flying under the radar.
That is where the platforms are leaning in. Bernstein analysts expect sports to be just 30% of prediction market volume by 2030.
Kalshi's value just doubled to $22 billion in a fresh funding round. Polymarket is now reportedly worth $15 billion, up from $9 billion last October.
Flutter Entertainment, which owns FanDuel Predicts, and DraftKings have both said they will keep funding their bets through the legal noise.
DraftKings CEO Jason Robins put a timeline on it. He told investors the company plans to keep investing in its prediction market through 2027 if the rules stay the same.
Flutter CEO Jeremy Peter Jackson used softer words. He said the company will live with the legal noise until the Supreme Court rules, and will keep funding deals on third-party prediction sites in the meantime.
What To Watch
Congress is also poking around. House Oversight Committee Chairman James Comer is asking Kalshi and Polymarket how they police insider trading.
The Senate already banned its own members from trading on these sites earlier this year. That came before the latest wave of state lawsuits.
On the industry side, Robinhood CEO Vlad Tenev said he gets the states' point even if he disagrees. He called it a fight over who has the right to make rules, and said it will take years to play out.
The fight may decide who gets to run prediction markets, but it has not slowed the flow of cash into them.
Whoever wins, the money is already in.
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