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The continued expansion of prediction markets in the United States has been one of the dominant topics in the gaming space in 2025, as some in the industry look to push back against its growth while others may look to join in it.
Following heightened scrutiny falling on prediction markets since Vixio GamblingCompliance took a similar look at the growing space earlier this year, and after a summer of key developments that have made the future of the space even more unclear, here is an updated look at some of the significant policy points observers should be looking out for going forward.
Kalshi’s Maryland Setback
What impact will dueling federal court rulings have on the continued growth of the space?
After scoring significant victories in federal courts in Nevada and New Jersey that prevented regulators from taking enforcement action against the prediction exchange for illegally offering a sports wagering product, Kalshi suffered its first court defeat when a federal judge in Maryland denied a request for a similar injunction.
While Maryland regulators have pledged not to commence enforcement action pending an appeal of the ruling to a federal appeals court, the ruling does throw a wrench into the up-to-this-point growing prediction space. Federal regulators have taken a hands-off approach to the issue since President Donald Trump took office in January, but state regulators and/or law enforcement agencies in more than a half-dozen states, all of which regulate sports wagering, have pressed the issue.
The ruling at least muddies the water somewhat as more companies look to enter the prediction markets space, serving as a reminder that the sector does come with some risk that an adverse decision from higher federal courts could ultimately result in state-level enforcement.
However, the upside of a sports betting-like product that could be offered in all 50 states without state-level gambling taxes could ultimately be worth the risk, both for power players looking to supplement their existing offering, as well as other companies that have been unable to break through in a sports betting landscape very much dominated by FanDuel and DraftKings.
FanDuel Makes Its Move
What role do sports betting leaders have in prediction market expansion?
After months of speculation and rumors as to what sports betting market leaders FanDuel and DraftKings may have up their sleeve regarding entering the prediction market space, it was FanDuel that made the first big move into the space, announcing a partnership with CME Group, the operator of the largest American derivatives exchanges.
The partnership, set to launch later this year, includes markets on key financial indicators and commodities like oil and gas, but absent from the announcement was any mention of sports-event contracts, only saying that future markets would remain to be determined.
While those markets may not be available at launch, the partnership does allow both FanDuel and CME to have an infrastructure in place and quickly launch sports contracts whenever they feel legal and regulatory conditions allow them to do so.
"I will list them if they would like me to. I am operationally ready on day one," CME CEO Terry Duffy told Bloomberg. "For now, I still think they are trying to make a decision on how they want to proceed."
The next big domino to fall will be whatever move DraftKings makes, which remains more uncertain after talks to purchase small commodities exchange Railbird Exchange reportedly have fallen apart, according to Earnings+More.
In addition to the aforementioned concerns about the murky legal situation, the two have other business factors to consider in making such a move, with one of the largest being their ongoing efforts to make peace with California Indian tribes after a brutal and expensive 2022 ballot initiative that saw public support for sports betting crumble in the Golden State.
The two companies have spent much of the last two years working to improve relations with the tribes in hopes of one day forming a partnership that will allow the operators to gain access to a regulated sports-betting market in California, but launching a full prediction markets product including sports-event contracts would almost certainly undo any goodwill that has been reached and make the relationship as adversarial as ever.
In addition, the prediction product, at least to date, contains limitations that may not necessarily play into the market leaders’ strengths. The two companies have remade expectations for operator hold rates through their same-game parlay offerings, and that type of product may be difficult to replicate in a prediction market setting that tends to be based on volume.
Tribes Begin Playing Offense
Could tribes be the best suited party to push back against the growth of prediction markets?
Indian tribes have been among the staunchest opponents of the expansion of prediction markets, seeing them as a violation of exclusive rights to offer gaming on-reservation and, in some cases, gaming exclusivity within states entirely. Many Indian tribes submitted comments to the Commodity Futures Trading Commission's (CFTC) ultimately scrapped roundtable on prediction markets, to the point that a special conference call with tribal leaders and acting CFTC chair Caroline Pham was held to hear tribal concerns. Tribes have also submitted amicus briefs in the ongoing litigation between Kalshi and state regulators in New Jersey and Maryland.
Last month, several California tribes, including the Blue Lake Rancheria, the Chicken Ranch Rancheria of Me-Wuk Indians, and the Picayune Rancheria of the Chukchansi Indians, filed another lawsuit against Kalshi and partner Robinhood arguing that the exchanges should geoblock tribal lands and that the companies are offering a form of unregulated sports betting. A similar lawsuit has also been filed against Kalshi in federal court in Wisconsin by the Ho-Chunk Nation.
Tribes could ultimately be the most effective advocate against the expansion of prediction markets, as they have the standing to pursue litigation in multiple key battlegrounds, and represent a key constituency for many federal lawmakers.
Polymarket's U.S. Return Looming
Will Polymarket emerge to become an even more significant player than Kalshi?
While Kalshi has been the dominant player to date in the American prediction exchange market, another significant competitive threat is on the horizon in the form of the pending re-entry of Polymarket to the U.S. following its acquisition last month of QCX, a CFTC-licensed exchange.
The exchange has been dormant in the U.S. under the terms of a 2022 settlement with the CFTC inked under the Joe Biden administration, but the company fully expects to return under the newly permissive CFTC and this time, doing so with a federal stamp of approval.
One key difference between Polymarket, Kalshi, and traditional sports betting options is Polymarket’s use of cryptocurrency and blockchain technology to complete trades, which helps bolster its popularity among a new wave of young male users that are often the target of sports betting platforms. The lack of regulated options for using cryptocurrency in the formal sports betting space could give Polymarket a leg-up over its competitors upon its return to the U.S. market.
The exact timeline for Polymarket's launch remains unclear, but the company has been teasing a launch this fall on social channels and marketing materials.
A New NFL Season On The Horizon
What does an NFL season customer-acquisition spree look like for prediction markets?
A key litmus test for the effect of prediction markets on sports betting is looming with the dawn of another NFL season. The beginning of every NFL season has traditionally been the biggest marketing and customer acquisition blitz of the year for traditional sportsbook operators, trying to capture or recapture football-only bettors who have largely been in hibernation since the conclusion of the Super Bowl in February.
One interesting thing to watch will be the marketing approach taken by prediction exchanges heading into the season. While it likely will not come close to the massive sports-betting advertising binges seen in the early 2020s, it will be a notable first step in the first full season of event contracts on NFL games to see how the marketing of prediction markets is similar and different from a traditional sportsbook.
Other notable factors will be if more mainstream media take notice of the growth of the prediction markets given the bigger spotlight of an NFL season, which in turn forces lawmakers and more regulators to pay attention, and also wagering data to monitor if the prediction markets are having any impact on states where sports betting is already live and regulated.
