1. Verdict

Rising, by a wide margin. Kalshi’s trading volume hit $9.4 billion in June, nearly double May’s total, DraftKings says its prediction market book turned a profit within months of launch, and multiple federal circuits have split on whether any state gambling regulator can touch this activity at all.

2. What Changed

This is the first instalment of State of Play on prediction markets, so the baseline is today’s picture, and it is a genuine legal muddle. In April the Third Circuit ruled in KalshiEX LLC v Flaherty that sports-related event contracts on a federally licensed exchange count as swaps under the Commodity Exchange Act, so New Jersey could not enforce its gambling law against Kalshi. Three months later a New York judge reached the opposite conclusion, ruling that nothing stops the company applying for a New York gambling licence like anyone else. The CFTC has since sued 9 states over its exclusive authority, and filed briefs in the Sixth and Ninth Circuits making the same case, so who regulates this product is being fought out court by court, not settled for everyone at once.

Commercially the divide runs the other way, firmly in the platforms’ favour. Kalshi’s June volume was pulled up by more than $5.4 billion in World Cup contracts, with a single last-16 match generating $48 million in trades before kick off, and DraftKings told investors its predictions volume had passed $1 billion annualised and turned a profit faster than almost any line it has launched. FanDuel is doing the same through market making on CME Group, while BetMGM, Caesars and Penn treat prediction markets as a rival bidding up acquisition costs rather than a line worth entering. And recently, 27% of all wagers on the World Cup were done through prediction markets.

3. Why It Matters

This is overwhelmingly an online story, since the product only exists as a digital exchange, and DraftKings, Fanatics, and FanDuel, leaning hardest in, have the biggest digital books to protect and the clearest read on how much acquisition spend it absorbs. Land-based operators are exposed at one remove, through the digital arms BetMGM and Caesars run alongside their casino floors, and through the spillover if state regulators lose enough fights that legislators start asking whether the licence regime around retail and online betting still means what it says.

The decision facing a board is not whether prediction markets are legal, because nobody can answer that while the Third Circuit and multiple courts also disagree; it is whether to build a position before the question resolves or wait for a clarity that may not arrive for another year of appeals. DraftKings made the first call and is already booking margin from it, so an operator that waited on April’s ruling has given up months of a line growing fast enough to double its volume month on month. Moving in now bets the CFTC keeps winning, and staying out, as Caesars and Penn have chosen, bets the opposite, backing a loyalty-based customer base instead.

Europe is drawing its own line, running the other way from the CFTC’s argument in the US. The UK Gambling Commission has said plainly that prediction markets are Betting Intermediary activity under British law regardless of the platform’s own label, and unlicensed operators must not target British consumers. Ireland’s regulator said this month it may go to the High Court for blocking orders against a platform that has refused to withdraw voluntarily, and nine EU states have formed a coalition opposing these products outright. Gibraltar has gone the other way, building the first standalone licensing regime for prediction markets anywhere, so a board picking a European base is choosing between a jurisdiction built to say yes and a continent inclined to say no. Multiple countries in Asia have also banned prediction markets.

4. What Would Change the Verdict

1. A Sixth or Ninth Circuit ruling for the states rather than the CFTC, handing regulators a second circuit and undercutting the Third Circuit’s position.

2. A state actually securing a blocking order, in the US or in Ireland, rather than a platform’s voluntary withdrawal.

3. A second major operator following DraftKings, Fanatics and FanDuel, or one of them pulling back once acquisition costs rise rather than fall.

4. Clear evidence that prediction market volume is displacing regulated sports betting handle rather than adding a new line alongside it.

5. Depending on the courts ruling, this may trigger legislative action at either the state or federal levels.

Sources

1. Courthouse News Service, ‘Kalshi loses bid to stop New York from regulating prediction markets’, 8 July 2026, https://www.courthousenews.com/kalshi-loses-bid-to-stop-new-york-from-regulating-prediction-markets/

2. Holland & Knight, ‘Federal Appeals Court: CFTC Jurisdiction Over Sports Event Contracts Likely Exclusive’, April 2026, https://www.hklaw.com/en/insights/publications/2026/04/federal-appeals-court-cftc-jurisdiction-over-sports-event-contracts

3. CFTC, ‘CFTC Reaffirms Exclusive Jurisdiction Over Prediction Markets in Sixth Circuit Amicus Brief’, 12 May 2026, https://www.cftc.gov/PressRoom/PressReleases/9230-26

4. Gambling Insider, ‘DraftKings, FanDuel Lean Into Prediction Markets on Q1 Earnings Calls; BetMGM, Penn, Caesars Forge Different Paths’, 2026, https://www.gamblinginsider.com/news/159767/draftkings-fanduel-prediction-markets-q1-earnings-calls-betmgm-penn-caesars

5. Bonus.com, ‘Kalshi Hits Record $9.4 Billion Trading Volume During World Cup-Fueled June Surge’, 2026, https://www.bonus.com/news/kalshi-9-4-billion-trading-volume-june-2026/

6. SBC News, ‘Ireland issues threat to prediction markets platform’, 20 July 2026, https://sbcnews.co.uk/technology/2026/07/20/ireland-prediction-markets/

7. SBC News, ‘Gibraltar draws clear line between gambling and predictions’, 13 July 2026, https://sbcnews.co.uk/featurednews/2026/07/13/gibraltar-predictions-markets-regulations/

8. UK Gambling Commission, ‘Prediction markets – here’s what you need to know’, 4 February 2026, https://www.gamblingcommission.gov.uk/blog/post/prediction-markets-heres-what-you-need-to-know