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Kalshi have spent a year beating state regulators in court. New York just ended the run.
US District Judge Analisa Torres, the same judge who decided the Ripple case, denied Kalshi's request to block New York from enforcing its gambling laws against their sports contracts.
Kalshi's core legal argument is that federal commodities law overrides state gambling law. One CFTC licence, valid in all 50 states, with no state gambling taxes.
Torres said no. There is a strong presumption against federal preemption in areas states have always policed, and gambling is one of them. She also weighed New York's interest in preventing addiction and protecting sports integrity 'heavily' over Kalshi's.
That preemption argument is the foundation the whole sector is built on. If it fails for sports contracts, every state gets a say, and the single-licence model starts to crack.
Kalshi filed an appeal to the Second Circuit within days and is separately fighting a push to halt their operations in Washington state entirely. With federal wins in Nevada and New Jersey pointing one way and New York now pointing the other, this is how questions reach the Supreme Court.
Goldman Sachs have banned employees from betting on prediction markets tied to finance: specific companies, elections, economic data and geopolitics. Morgan Stanley say their staff code of conduct already covers prediction-market betting, and Bank of America are restricting trades on company-specific, economic and financial-services events.
The fine print is very Goldman. Sports and entertainment bets are still allowed. Repeat offenders face dismissal, and improper gains above $200 can be clawed back or sent to charity.
In May, the CFTC and DOJ charged a Google employee with using inside knowledge of Google's 'Year in Search' rankings to win Polymarket bets, the first event-contract insider-trading case involving a private company. Governments are moving the same way: Chicago is advancing a ban on city staff trading on private information, Arizona barred state employees, and House Democrats want federal judges out of the markets altogether.
A market on whether a company beats earnings is a parallel equity market without an insider-trading statute. Prediction markets are now big enough that every compliance department in America has an opinion about them.
Polymarket want Americans to trade predictions with borrowed money.
On 3 July, they filed with the National Futures Association to register an affiliate as a futures commission merchant, the licence that allows customers to trade on margin. The CFTC still has to approve the rulebook changes.
Margin means putting down a fraction of a position's value instead of the whole thing.
For the platform, it multiplies volume per dollar of customer deposits. For traders, it multiplies both sides of the bet. Kalshi already offer it, and in a two-giant race, matching the rival's offerings is table stakes.
Prospect Markets have signed a letter of intent with OG Broker, a registered futures broker related to Crypto[dot]com, to offer sports event contracts to US customers.
The plan: list the contracts on Nadex, the CFTC-registered exchange behind OG Prediction Markets and Crypto[dot]com's US derivatives arm, with OG Broker handling the clearing.
The target launch is Q3 2026. Worth being clear: the letter of intent is non-binding, and definitive agreements and regulatory approvals still stand between here and live markets.
Crypto[dot]com just lost DraftKings as a tenant when DKeX went live this month.
Renting their licence and rails to smaller entrants is the answer: if you cannot keep the biggest client, become the landlord for everyone else. A US licence is the scarcest asset in this sector, and it is now available to rent.
🗞 General
Macquarie: prediction markets topped $50 billion in June as the World Cup drives record trading (Read more here)
Bloomberg: these are the sharps actually making money on prediction markets (Read more here)
WSJ: how Polymarket made fake bets go viral (Read more here)
Susquehanna puts up $500 million to 'hedge' World Cup games (Read more here)
Nearly $200 million has already been traded on the midterm elections (Read more here)
Google bans prediction market transactions amid backlash (Read more here)
Barron's: Love Island is the new bombshell for prediction markets (Read more here)
🤝 Announcements & Partnerships
Reuters exclusive: Kalshi in talks with regulators to expand never-expiring derivatives to new assets (Read more here)
Kalshi become the Pro Padel League's official prediction market partner on a multiyear deal (Read more here)
Polymarket to integrate TWAP pricing for crypto markets after oracle criticism (Read more here)
💰 Funding & M&A
Meta build their own 'Polymarket' following the failed Kalshi acquisition (Read more here)
Sports-first startups look to compete in the trillion-dollar prediction market industry (Read more here)
⚖️ Regulation & Legal
North Carolina signs the first state tax on prediction markets into law (Read more here)
Two traders sue Polymarket over the disputed Strategy bitcoin market (Read more here)
Kalshi and tribes quarrel over state gambling agreements on appeal (Read more here)
Democrats probe Kalshi and Polymarket over Trump audit-immunity markets (Read more here)
Former CFTC chair nominee Brian Quintenz joins a pro-prediction-markets coalition (Read more here)
A US soldier seeks dismissal of the CFTC's case over Maduro-capture contracts (Read more here)
Disclaimers
This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.
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When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks include price volatility, loss of capital, illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. You may not be protected under financial compensation schemes typically afforded to investors dealing with regulated entities. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.