The prediction market industry just picked a fight with nearly every state in America. And it’s losing allies fast.
A coalition of 44 states has now aligned against prediction market platforms that offer sports-related event contracts, arguing these products are functionally identical to sports betting and should be regulated accordingly.
The legal battle lines
Platforms like Kalshi argue they’re regulated by the Commodity Futures Trading Commission under the Commodity Exchange Act, making them federally supervised financial instruments. States say that’s a convenient fiction, that betting on whether the Knicks cover the spread is gambling regardless of whether you call the contract a “commodity.”
As of April 2026, 38 state attorneys general had formed a bipartisan coalition backing Massachusetts in its legal challenge. Their argument is straightforward: sports prediction contracts qualify as illegal gambling under existing state laws, and federal oversight by the CFTC doesn’t preempt those laws.
