How Prediction Markets Are Changing American Betting Rules

This year became a turning point for the American betting industry. Prediction platforms are no longer perceived as experimental and have begun to intersect directly with the established system of state-level wagering regulation.

Casino Market’s team analysed the situation and assessed how the standoff between federal and local oversight would impact the competition in 2026. You will learn about the segment’s dynamics and growth prospects, potential legislative restrictions, and the effect on the traditional sportsbook niche.

You can resort to our experts for free consultations on the development, launch, and scaling of an online gambling business in various jurisdictions.

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Prognosis Projects in the US: Current Situation

The term “prediction markets” encompasses platforms that offer contracts on the outcomes of events, including sports-related ones, based on trading exchange principles. Due to their technological architecture and legal classification, these products are not directly associated with classic bookmaking services.

This factor allows such projects to:

• operate within the federal regulatory framework;
• launch markets focused on athletic matches and tournaments;
• partner with major media outlets, including leading business and financial ones.

In 2025, internet portals offering event contracts significantly increased their presence in the US. Additionally, they attracted the attention of supervisory authorities, operators, and investors.

Connecticut Conflict: First Serious Precedent

The most significant confrontation of this year unfolded in the Constitution State. In early December, its Department of Consumer Protection issued a cease-and-desist order against several platforms.

Among the accused brands were:

• Kalshi, a Robinhood-affiliated studio specialising in financial derivatives;
• Crypto.com, a multifunctional trading web resource with a retail audience.

The regulator believes that both companies offer unlicensed sports betting under the guise of event contracts. Connecticut’s official position is as follows: if the asset is essentially a wager, its classification remains unaltered, even if it is framed as an exchange instrument.

Authorities emphasised that the law clearly defines the scope of organisations allowed to offer bookmaker services on the Internet. This pool includes the state lottery and tribal casinos. In assessing Kalshi’s and Crypto.com’s activities, the Department also highlighted the risks associated with adherence to the basic requirements for certified operators.

Key aspects comprise:

• correct user age verification;
• compliance with geolocation restrictions;
• control over the fairness and transparency of settlements;
• availability of responsible practices and tools required for regulated platforms.

Kalshi challenged the orders in federal court, arguing that its products are registered with the Commodity Futures Trading Commission (CFTC) and are considered derivatives. The enterprise argues that state intervention undermines the priority of national oversight. Robinhood and Crypto.com share this position, noting their willingness to work with local authorities if necessary.

The case quickly expanded beyond a local dispute and became a benchmark for the entire industry. If the court upholds Connecticut’s ruling, trading platforms will be subject to the same licensing system as bookmakers. If a federal side prevails, exchange services will be able to develop nationwide. They will rely on uniform global norms rather than the restrictions of individual regions.

Tough but Consistent Stance of Nevada

Unlike Connecticut, the Silver State’s authorities took a more restrained and procedural approach. Throughout 2025, they often held public workshops and hearings on the legal status of sports contracts.

These discussions were part of a broader regulatory agenda and touched on several areas:

• managing and protecting large data sets;
• applying practical compliance mechanisms;
• ensuring fairness and integrity in the vertical.

The turning point came in late November, when a federal judge in Las Vegas ruled that Kalshi’s athletic trading offers were subject to Nevada’s gambling laws. This decision effectively gave the authority the power to restrict or prohibit the platform’s operations if it failed to adhere to local standards.

Although the company announced its intention to appeal, the ruling itself significantly strengthened the regulatory body’s position. This situation confirmed the right to review niche solutions under state law.

Nevada’s strict attitude is motivated by specific reasons. Following a series of major cyberattacks on casinos in 2023, policymakers are paying particular attention to digital risks and firms providing technological services. In these circumstances, the authority is unlikely to tolerate brands operating outside the traditional licensing and oversight system.

By 2025, an unspoken rule had been established in the region. If a consumer perceives a product as gambling, it will be classified as such, regardless of the category specified in documents or references to federal regulations.

How the Sector Attracts Market Leaders

One of the most notable corporate events of this year was DraftKings’ announcement of acquiring Railbird Technologies with its CFTC-approved Railbird Exchange. The deal immediately became a strategic pivot toward a new product segment and nationwide operations, outside the classic sports betting model.

The next step for this major operator will be the launch of DraftKings Predictions. The platform focuses on trading regulated contracts based on real-world events in finance, culture, and entertainment. The giant plans to add athletic markets where legislation allows it.

For the brand, it is a practical way to establish a presence in states which prohibit online wagering. The prognosis platform format opens an alternative avenue for scaling without directly conflicting with local regulatory standards.

For the entire industry, the deal has become a clear signal of a new consolidation trend. The line between bookmakers and contract-based portals is rapidly blurring, and the interest of major brands is significantly accelerating the sector’s development.

Let us see how other international flagships reacted to the innovation:

1. Fanatics. The enterprise launched Fanatics Markets, which became available in approximately 20 states by December 2025. The brand registered its futures broker with the CFTC and offered contracts on outcomes in economics, politics, sports, and finance, emphasising the product’s independence from the bookmaking business.
2. Polymarket. The corporation followed a similar path and returned to the vertical after restructuring under the CFTC model. In 2025, the platform expanded its offerings, adding athletic proposals alongside the existing traditional macroeconomic and political contracts.
3. Flutter. It also demonstrated interest in the segment by announcing the FanDuel Predicts project in partnership with CME Group. The service is scheduled to launch in late 2025, with further scaling planned for 2026. The portal will operate separately from the current betting ecosystem, allowing for the development of a federal format without interfering with licensed wagering.

Court Decisions: Impact on the Balance of Power

Kalshi’s legal battles have become a landmark moment for the entire industry. The studio continues to defend its model and recently announced a series of multi-year partnerships with major commercial news networks. This move paves the way for a massive presence: the company’s products could appear on television as early as 2026.

Another important signal to the market came with the revealed results of the protracted dispute between the CFTC and PredictIt. A federal court ruled in favour of the latter, upholding its right to offer contracts on political events.

The rapid growth of prognosis portals has demonstrated that this vertical is truly viable. Nevertheless, it has also strained relations with regulators and exposed divisions within the industry itself.

Multiple ground casinos and state-licensed operators believe that alternative trading platforms are eroding existing rules and weakening consumer protection. This viewpoint was supported by the American Gaming Association, which launched educational campaigns, including on YouTube, highlighting the legal uncertainty surrounding such services.

In response, FanDuel, DraftKings, and Fanatics withdrew their membership from the organisation. They explicitly stated that the alliance’s new position no longer met their product strategies.

Those working with the digital-1st approach or contracts insist that the format benefits them with:

• deeper liquidity;
• a high level of operational transparency;
• access to event categories not available in fixed-odds betting.

The Main Things About the Rise of US Prediction Markets

This year signified the start of high-profile debates and confrontations between 2 closely related verticals: common wagering and the new, federally regulated, technological niche. The 2025 events demonstrated that prognosis platforms are not a temporary experiment but a viable, rapidly growing niche that combines trading and gambling principles.

Key points worth noting:

• Contract-offering websites have proven their sustainability and scaling opportunities at the national level.
• Classic sports betting is facing competition and must consider new adjacent formats.
• The exchange-style sector is attracting the attention of large investors, opening up new windows in product development.
• Federal regulation gives trading portals an advantage in states that restrict common wagering.

Casino Market’s team can create an innovative, technologically advanced project in the gambling sphere based on your specific wishes, business goals, and budget.

Feel free to contact our specialists if you would like to join the ranks of the most successful entrepreneurs, powered by reliable software, well-thought-out strategies, and professional support.

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James Burton The Casino Market partner, the owner of the gambling establishments’ network

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