Tracking Prediction Market Litigation Across the U.S.

The U.S. prediction market landscape in 2026 has become a multistate, high-stakes legal battle, with prominent platforms like Kalshi and Polymarket finding themselves in the throes of litigation across the states.

As we recently detailed in our U.S. Prediction Markets Litigation Tracker, available exclusively to Vixio customers, litigation between state governments and prediction markets such as Kalshi has proliferated since March 2025 when Kalshi filed a federal lawsuit seeking an injunction to prevent the Nevada Gaming Control Board from taking formal enforcement actions related to the sports-event contracts offered on its federally-regulated exchange.

As of late April 2026, there are 30+ lawsuits pending between prediction markets and state or tribal government entities brought before state and federal courts. With different appellate courts reaching contradictory opinions, the future of sports-related event contracts is likely to be decided by the U.S. Supreme Court.

The U.S Litigation Landscape: Interactive Map

‍Hover over each state to reveal its current litigation status.

Why Prediction Markets Matter Now

Prediction markets are reaching a critical inflection point in 2026. The combination of explosive commercial growth, aggressive federal intervention, and legal challenges that are rapidly moving toward the U.S. Supreme Court has put the issue at the forefront of the gaming industry.

The core issue across the pending litigation is whether these platforms are federally regulated financial exchanges, and thus exempt from state enforcement, or unlicensed sports wagering operations. This issue has created a significant divide between the CFTC, state authorities, and the courts.

State regulators maintain that sports-related event contracts are illegal sports wagering that bypass state regulations. Meanwhile, Kalshi, Polymarket, and other platforms continue to assert exclusive federal jurisdiction over their offerings. 

The CFTC has also stepped into the fray, filing an amicus brief in the Ninth Circuit Court of Appeals case siding with Kalshi against Nevada regulators. The federal regulator took its most aggressive stance yet when it filed lawsuits against Arizona, Connecticut and Illinois in early April to prevent the states from enforcing gambling laws against designated contract markets. 

The Current State and 2026 Outlook

While the Third Circuit recently handed prediction markets a massive victory, the Ninth Circuit judges have expressed skepticism and appear inclined to swing the pendulum back toward state regulators. This circuit level split would all but guarantee the U.S. Supreme Court intervention. 

Through the remainder of 2026, Vixio expects the platforms will continue to file preemptive federal lawsuits to block state enforcement, while states will increasingly turn to state-level civil and even criminal actions to maintain home-field advantage.

5 Key States to Watch

To track the trajectory of litigation, including consequential rulings, as well as legislation that could impact the future viability of sports-related event contracts, these are the key states to watch:

1. New Jersey

In April 2026, the Third Circuit Court of Appeals upheld an injunction against state regulators, ruling that the CFTC has exclusive jurisdiction to regulate these contracts. The court's majority argued that sports event outcomes have legitimate financial consequences for sponsors and franchises, meeting the legal definition of a “swap”. This remains the highest court ruling to date and could influence where other states will land on the issue.

2. Nevada

In recent Ninth Circuit oral arguments, judges appeared skeptical of the swap definition, with one judge labeling the distinction between peer-to-peer contracts and traditional bookmaking as “sophistry to the nth degree”. A ruling in favor of Nevada would create a direct circuit split with the Third Circuit, providing a pathway to the Supreme Court.

3. Arizona

Arizona significantly escalated the situation in March 2026 by filing the first-ever criminal misdemeanor charges against a prediction market operator. Attorney General Kris Mayes' 20-count complaint includes illegal betting on sports and wagers on election outcomes. To further complicate Kalshi’s defense, the judge cited the Younger abstention doctrine, which provides that federal courts should not interfere with ongoing state criminal proceedings. The outcome here will determine if other states pursue criminal action to bypass federal civil injunctions.

4. New York

New York is the latest state to pursue civil enforcement in court. In April 2026, Attorney General Letitia James filed suit against Coinbase and Gemini, seeking permanent injunctive relief against their operations in the state. The filings highlight the platforms’ acceptance of wagers from individuals aged 18 to 20, a central complaint which is quickly becoming another flashpoint in the legal woes. Unlike some other states, New York is also pursuing forfeiture of ill-gotten gains, loss restitution, and fines of up to three times the profits the companies made.

5. Kentucky

While other states sue, Kentucky has chosen to address prediction markets through legislation. A new law enacted in April 2026 prohibits any licensed gaming operator from doing business with platforms that offer prediction markets in the state. The broad language of the bill presents a potential challenge for operators and suppliers in navigating whether they can continue to operate in the state. Ultimately, Kentucky is testing whether state-specific laws can curtail the industry even if federal preemption holds in court. 

The Path Forward

As we move toward the second half of 2026, the legal pendulum will continue to swing back and forth, either in favor of the states or of the prediction markets platforms, as more courts render rulings. 

We will continue to monitor these developments via our Litigation Tracker, which summarizes the status of all cases between prediction markets and state or tribal government entities brought before state and federal courts.

‍
Don't Let Regulatory Change Derail Your Expansion Strategy
‍

The litigation surrounding prediction markets is a stark reminder that compliance is a moving target. While keeping ahead of a market that continues to evolve at pace across the U.S. remains key, the real challenge is how to manage the impact these changes will have across the entire business - and ultimately, on its expansion strategy.

For businesses managing multiple jurisdictions, relying on manual research, siloed processes, and fragmented evidence trails leads to delayed launches and missed revenue that can scale into the millions. Don't let shifting regulations dictate your market share. Book a demo with a member of our team to see how the Vixio platform can help your business track, prioritise and action emerging markets like these, turning compliance into an expansion enabler - not a blocker.

And remember to download your copy of a more detailed, shareable breakdown of the topic in our digital guide, Prediction Markets in 2026: What's at Stake?