City of Baltimore goes after prediction markets for sports betting
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Kentucky has sued prediction markets Kalshi and Polymarket for operating unlicensed and illegal sports betting.
PANews reported on June 18 that, according to CoinDesk, Kentucky Attorney General Russell Coleman has sued Kalshi and Polymarket, accusing them of providing illegal sports betting without a state gambling license. This move puts the Republican-leaning state, which is expected to vote for Trump 64% of the time in 2024, at odds with Trump's position. Trump has previously stated that prediction market regulation should fall under the jurisdiction of the federal CFTC and has publicly supported CFTC Chairman Mike Selig in upholding the agency's exclusive jurisdiction over event contracts. Kentucky also alleges that these companies and their partners (Coinbase, Robinhood, and Webull) failed to provide gambling-related assistance resources as required by local law. The CFTC has previously sued eight states to defend its exclusive jurisdiction over prediction markets.
The US betting industry is calling for legislation to ban "sports prediction markets" from the crypto bill.
According to Mars Finance, on June 17th, The Block reported that several U.S. gambling industry organizations are urging Congress to include explicit provisions in the upcoming crypto market structure bill to prohibit "prediction markets" related to sports betting and casino betting from being offered as financial products on crypto platforms. Industry organizations, including the American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers, wrote to the Senate pointing out that these platforms offer nationwide betting services through "sports event contracts," effectively circumventing state gambling regulations and local licensing systems. These products, packaged as "financial derivatives," may weaken consumer protection mechanisms, pose risks to young users, and impact the traditional gambling industry structure that relies on local tax revenue and employment. This controversy is occurring against the backdrop of ongoing U.S. crypto market legislation. The Senate Banking Committee has already advanced a version of the Clarity Act, which will next go to the full Senate for a vote. Meanwhile, the debate surrounding whether prediction markets fall under the CFTC's regulatory purview continues to escalate. At the same time, the power struggle between regulators and platforms is intensifying. Some states have taken enforcement action against platforms such as Kalshi and Polymarket, while the U.S. Commodity Futures Trading Commission (CFTC) has recently pushed for rule changes in an attempt to support the development of some sports-related prediction markets while limiting risk categories.
The U.S. gambling industry and unions are pushing to ban prediction markets from offering sports betting services in the crypto bill.
PANews reported on June 17 that, according to Semafor, the US gambling industry, along with tribes and unions, is urging lawmakers to include provisions banning prediction markets like Kalshi from offering sports betting in pending crypto legislation. The American Gaming Association (AGA), along with the Indiana Gaming Association, the AFL-CIO Hotel and Gaming Industry Union Council, and UNITE HERE, stated in a letter that prediction markets have fueled the largest gambling expansion in US history over the past 18 months, without voter approval or legislative authorization. The AGA claims that states have lost $1 billion in revenue due to prediction markets since early 2025, a claim disputed by prediction market proponents.
The Massachusetts amended complaint alleges that Kalshi offered sports betting to users under the age of 21.
PANews reported on July 1st that, according to Cointelegraph, the Massachusetts Attorney General has received court approval to file an amended complaint against prediction market platform Kalshi, adding allegations that Kalshi targeted users under 21 years of age through social media and college campus marketing and failed to take effective measures to prevent their use of the platform. Kalshi allows individuals aged 18 and over to create accounts and place bets on sports events. The case began in September 2025, with state authorities accusing Kalshi of violating state law by offering sports betting. The CFTC previously filed a submission in Massachusetts asserting "exclusive jurisdiction" over prediction markets, with Chairman Michael Selig stating that "Congress has granted the CFTC the sole power to regulate the commodities derivatives market." Kalshi has not yet responded to requests for comment.
Bernstein: Rapid consolidation of prediction market technology stacks may trigger a wave of mergers and acquisitions in the sports event contracts sector.
According to a report by CoinDesk, Wall Street brokerage Bernstein stated in a recent report that the rapid consolidation of prediction market technology stacks is increasing the likelihood of a new round of mergers and acquisitions in the sports event contracts and financial markets sectors. The report states that over the past eight months, major prediction platforms have been moving towards simultaneously controlling customer distribution and exchange infrastructure. While Kalshi and Polymarket possess core technology stacks, their distribution capabilities are relatively lagging, making them potential acquisition targets. Recent moves include DraftKings' acquisition of Railbird to launch DKeX, Robinhood's partnership with Susquehanna to create Rothera, and Coinbase's acquisition of The Clearing Company. Bernstein believes that Robinhood and Coinbase are currently in a relatively advantageous position in the competitive landscape, both possessing large consumer user bases and fully owned, regulated infrastructure, while Kalshi and Polymarket, lacking large-scale distribution capabilities, are seen as potential acquisition targets.
Research: Approximately 60% of Polymarket's first World Cup bettors had no prior experience with blockchain, making prediction markets a new gateway to crypto.
According to ChainCatcher, citing Cointelegraph, a study of Polymarket's 857,000 active users revealed that approximately 60% of first-time bettors during the World Cup had never previously interacted with blockchain protocols. Alvin Kan, COO of Bitget Wallet, stated that prediction markets have changed the traditional logic for crypto users to get on board—users no longer need to understand blockchain technology beforehand, but participate directly because they have opinions on real-world events. This makes prediction markets a new entry point for some users into the crypto space. Data shows that Polymarket's World Cup champion contracts have exceeded $3.1 billion in trading volume, with sports contracts contributing over $4.9 billion in trading volume on Polymarket in the past 30 days, and reaching $8.5 billion on Kalshi, becoming the most significant trading category on both platforms.