Another week, another breathless week spent trying to keep up with the onslaught of prediction markets news. Or at least trying to scratch the surface.
Here at SBC Americas each Friday, we recap some of the biggest developments and some stories you may have missed. This week was dominated by Michigan becoming the latest major court battleground and state legislators and members of Congress looking to force the issue.
All hell breaks loose in Michigan
Even recounting the week’s events in Michigan alone could take up more than a reasonable word count, but here’s a quick play-by-play:
Attorney General Dana Nessel filed a civil lawsuit on Tuesday against Kalshi in state court, seeking a permanent injunction to stop the company from offering sports event contracts within state borders. The 10th state to become embroiled in litigation with Kalshi one way or another, Michigan joined Massachusetts as just the second to sue the operator without first trying to chase it with a cease-and-desist order or other enforcement measures.
That got the attention of both Polymarket and Kalshi partner Robinhood, which both immediately pre-emptively sued Michigan in federal court. Just as Polymarket did in light of a judge’s ruling against Kalshi in Massachusetts, Polymarket claimed that the state’s lawsuit against Kalshi indicated that it is in “imminent and concrete danger” of facing enforcement action from state authorities.
More legislators take up arms
As prediction markets trading on the conflict in Iran became the latest hotbed of insider trading suspicion, lawmakers at the state and federal level are mobilizing. Congressional Reps. Dina Titus and Ritchie Torres already have bills in play to curb prediction markets, as do states including New York, Illinois and Iowa, and several new bills were added to the mix this week.
In Congress, a new effort led by Democratic Sens. Jeff Merkley and Amy Klobuchar would ban the president, vice president, members of Congress and other federal officials from trading on event contracts, citing concerns over insider trading. Another federal bill announced on Friday would establish the Event Contract Enforcement Act to ban prediction markets on topics such as war, gaming and elections
And at the state level, prediction markets are finding their way into broad gambling bills. A fresh bill in Illinois filed this week would create the Prediction Markets Regulation and Taxation Act. The bill would attempt to set up a licensing regime and tax on platform revenue.
CFTC signposts that its new rules are coming
A few weeks ago, Commodity Futures Trading Commission (CFTC) Chair Michael Selig promised that the agency would draw up a new framework for prediction markets, and it seems that moment has arrived.
The CFTC submitted a notice of new rules to the White House for review on Monday and the White House Office of Information & Regulatory Affairs listed it as a pending regulatory review later in the week, something that would set the scene for the commission to start consulting with stakeholders with a view to ultimately laying out the rules it wants the market to follow.
What these rules will actually entail remains to be seen, but it’s the latest clear indication that the Selig-era CFTC intends to firmly take the reins and steer the future of event contracts, even as litigation rages on in numerous states about the fundamental issue of federal regulatory rights vs. state gaming authority.
“Weve got to make sure that we don’t have 50 different regimes for our derivatives products across the United States,” Selig said at the Milken Institute’s Future of Finance 2026 conference this week. He vowed to ensure that the CFTC will “assert our authority where it makes sense and where we see states getting a little ahead of themselves.”
Nasdaq wants in on the game
Could we soon see prediction market-style options listed on Nasdaq?
Reuters reported this week that the stock exchange applied to the Securities and Exchange Commission to list binary options on the Nasdaq 100 and Nasdaq 100 Micro Indexes. While event contracts are overseen by the Commodity Futures Trading Commission, binary options are regulated by the SEC.
If granted, it would effectively expand Nasdaq’s remit, currently focused on allowing investors to buy and sell shares for companies, to also let consumers predict the outcome of stocks’ performances. Consumers could trade yes-or-no on markets such as whether Nasdaq companies’ stock price will rise or fall or what valuation it will hit within a certain time frame.
Gambling is not investing, right?
How about another coalition? President Donald Trump’s former acting Chief of Staff was the latest figure to speak out against prediction markets’ claims that event contracts are financial products rather than gambling that is wearing a different hat. Ex-Congressman Mick Mulvaney leads a new group called Gambling Is Not Investing (GINI) to spread the message indicated by its name.
“Gambling products — regardless of what you call them — must follow established state and tribal laws,” Mulvaney wrote this week. “Rebranding sports wagering as ‘trading’ or ‘investing’ or ‘predicting’ misleads consumers, undermines responsible gaming protections, and weakens the state and tribal systems built to protect the public and fund vital community services.”
GINI will add its voice to other entities like the American Gaming Association, which has enlisted former New York Gov. Chris Christie as an advisor and spokesperson. In the other corner, Kalshi, Crypto.com and others continue to lobby under the banner of the Coalition for Prediction Markets, while the Sports Betting Alliance (SBA) straddles something of a middle ground given that its leading members FanDuel, DraftKings and Fanatics have one foot firmly planted in the state-regulated sports betting ground and the other in the prediction markets space.
DFS operators make predictions-focused moves
Daily fantasy sports-rooted operators were some of the early adopters of sports prediction markets. Underdog got going in summer 2025 through a workaround technology deal with Crypto.com, PrizePicks has struck deals with Kalshi and Polymarket, and historic DFS sites DraftKings and FanDuel have gone all-in on expanding sports into states that don’t allow legal sports wagering.
Add Jake Paul’s Betr to the list, as the company unveiled a new partnership with Polymarket that will roll prediction markets into what it calls its “super app,” which also offers DFS, sports betting, social casino and sportsbook options, online skill games and more. Paul’s Co-Founder Joey Levy said this week that adding event contracts on sports, culture and more “is an important step toward our vision of creating the first true nationwide real-money gaming and financial super app.”
Meanwhile, Underdog hit headlines with a round of layoffs that reportedly impacted around 20% of its workforce. Founder and Chief Executive Officer Jeremy Levine directly referenced the company’s transition from “a focus on a state-by-state framework to a national prediction markets platform” as a factor in the cuts.
IMGL President Dunbar on iGaming Daily
Finally this week, International Masters of Gaming Law (IMGL) President and Jones Walker Partner Marc Dunbar stopped by the iGaming Daily podcast to share his candid and often blunt thoughts on everything that is happening right now.
His key conclusions? The CFTC’s dramatic change of stance on prediction markets is staggering, and, until the federal vs. state legality issue reaches the Supreme Court, the mess of state-by-state litigation is largely just noise and “the CFTC’s opinion is as valuable as mine — it doesn’t matter at all.”
