How 2025 became the year prediction markets dominated US gambling industry news

Summary

Prediction markets exploded into the mainstream in 2025, driven by operators such as Kalshi, Robinhood and Polymarket launching sports event contracts and striking major media and league deals. That growth has provoked intense regulatory pushback from states, tribes and attorneys general who argue many of these contracts are unlicensed gambling, not federally regulated derivatives. Legal battles spread across numerous states, producing injunctions, reversals and a pile of lawsuits that observers expect will head to the US Supreme Court. Meanwhile, big names — DraftKings, FanDuel, Fanatics, Google, NHL, CNN and investors including Sequoia and Andreessen Horowitz — have either launched products, partnered with or invested in prediction market firms, cementing the sector’s commercial prominence despite regulatory uncertainty.

Key Points

Kalshi, Robinhood and others grew trading volumes rapidly; Kalshi reported more than $1bn in weekly volume and thousands of markets, many tied to sports.
States, tribal groups and regulators issued cease-and-desist letters and lawsuits arguing sports event contracts constitute illegal gambling without state licences.
Federal and state courts issued mixed decisions: preliminary injunctions in some jurisdictions, reversals in others, and ongoing appeals with broad amicus support for states and tribes.
The CFTC’s role is unsettled amid commission turnover and cancelled roundtables; regulators and industry are still contesting whether these contracts fall under federal derivatives law.
Major investors and media deals (Google Finance, Yahoo Finance, CNN) plus sports league partnerships (NHL) pushed prediction markets into mainstream public awareness.
Sportsbooks and DFS operators (DraftKings, FanDuel, Fanatics, PrizePicks, Underdog) launched or partnered on prediction products, provoking warnings that licences could be at risk in several states.
Tribal authorities have formed a coordinated front, arguing federal preemption claims don’t override tribal and state gaming protections.
The legal fight is likely to escalate to the Supreme Court, making 2026 a pivotal year for how US gambling law treats prediction markets.

Context and relevance

The clash over prediction markets sits at the intersection of finance, gaming law and media. If courts rule these products are federally regulated derivatives, operators can broadly offer markets nationwide; if not, states and tribes will retain control, forcing operators to navigate a patchwork of licensing and enforcement. The outcome will shape where and how sportsbooks and tech firms can monetise event-based markets, influence partnerships with leagues and media, and determine whether major investors will continue to back rapid expansion. For anyone tracking US betting regulation, fintech policy, or sports commercialisation, this story is central to what the industry will look like in the next five years.

Why should I read this?

Quick, sharp and messy — this is the legal and commercial fight that will decide whether prediction markets become a regulated national business or a state-by-state headache. If you work in gaming, fintech, media or league partnerships (or just care who gets to bet on what), you’ll want to know who’s suing whom, which states are pushing back, and how big operators are rolling out products despite the heat.

Author style

Punchy: the piece cuts straight to the clash — money, regulators and market expansion — and why it matters. This is one of those stories you can skim for headlines, but you should read the detail if you want to understand where licences, partnerships and regulation will land in 2026.