Prediction Markets Took Over US in 2025

Prediction markets are heading into 2026 after a breakout year that turned into a nationwide legal and regulatory brawl. What started with Kalshi’s high-profile election contracts in late 2024 has now escalated into a fight over sports-related event contracts and who gets to regulate them: federal markets overseen by the Commodity Futures Trading Commission (CFTC) or state gaming systems and tribal authorities.

Kalshi, Robinhood and Crypto.com have faced a wave of cease-and-desist orders, lawsuits and challenges from regulators and tribal interests across the country. Critics argue these sports outcome contracts look and function like traditional wagers, meaning they should require state gambling licenses. Operators counter that they are offering federally regulated derivatives and can legally operate nationwide.

The courtroom battle intensified throughout 2025. Judges in some states initially blocked enforcement actions against Kalshi, while other rulings later favored regulators, adding to uncertainty. States and tribes have piled on with amicus briefs, and industry sources increasingly expect the dispute over sports event contracts to end up before the US Supreme Court.

Despite the blowback, prediction markets kept surging. Kalshi says weekly trading volume is now above $1 billion, with thousands of markets available, many tied to sports. Big-money backing also accelerated: Kalshi’s valuation reportedly jumped sharply after major venture investments, while Polymarket pushed deeper into the US spotlight after returning from a prior CFTC settlement era.

Sportsbook brands entered the space too. DraftKings and FanDuel launched prediction-style products, while other operators tested event contracts and faced warnings from state regulators that licenses could be at risk. Media partnerships pushed prediction data into the mainstream, from finance portals to broadcast tickers, ensuring the controversy stayed on top of the gambling news cycle through the end of 2025.