Every week is a big week when it comes to prediction markets news.
Each Friday at SBC Americas, we break down some of the headline stories and the developments you may have missed.
Wisconsin sues major prediction market players
Add Wisconsin to the list of states taking the fight to prediction market platforms in court.
Wisconsin Attorney General Josh Kaul and the Department of Justice (DOJ) are suing each of Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase in state court over what the state believes is the sports betting equivalent product they are peddling in the state. The lawsuits are seeking preliminary and permanent injunctions against the companies to halt their activity in Wisconsin.
“Thinly disguising unlawful conduct doesn’t make it lawful,” said AG Kaul in a press release. “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”
Wisconsin joins the likes of Nevada, Massachusetts, Arizona, and New York as states that have proactively moved to sue prediction market companies in state court. The timing of Wisconsin’s assault against prediction markets is also notable in that the state just formally legalized online sports betting under a tribal gaming compact model. Things just got more serious in the Badger State.
Kalshi bans 3 political candidates, including sports betting advocate
Continuing what it has publicly positioned as a crackdown on integrity, Kalshi trumpeted that it has banned three political candidates from trading on its platform after the trio were found to have traded on markets for elections in which they were running.
- Minnesota State Sen. Matt Klein, who agreed to pay a $539.85 fine, said he bet $50 on himself to win the state’s Democratic primary because he was curious about how it worked.
- Former Texas Republican primary candidate Ezekiel Enriquez also settled for a fine of $784.20 after trading a small amount on his own race. Like Klein, he was banned from Kalshi for five years.
- Former Virginia Democratic primary candidate and current independent candidate Mark Moran was fined much more, at $6,229.30, which Kalshi said was because he refused to cooperate with them or accept responsibility. In an eyebrow-raising explanation of his actions, Moran said on X that he only used Kalshi to bet on himself to see if he would be caught, essentially positioning it as a test of Kalshi’s defenses.
Kalshi used the three very public suspensions as evidence that its internal monitoring for integrity issues is working. Earlier this year, Kalshi fined a video editor for YouTuber MrBeast and a California gubernatorial candidate over similar violations. How much of it is public posturing? We couldn’t say.
Feds arrest U.S. soldier for Polymarket bets on Maduro
Not to be outdone by Kalshi, Polymarket hit the headlines on Thursday in a big way. Federal authorities arrested a special forces soldier who was involved in the capture of Venezuelan President Nicolás Maduro, alleging that he used classified information to win more than $400,000 on Polymarket trading related to the operation.
U.S. Army soldier Gannon Ken Van Dyk is charged with crimes including wire fraud, commodities fraud, unlawful use of confidential government information for personal gain, theft of nonpublic government information, and making an unlawful monetary transaction. He allegedly bet more than $33,000 on Polymarket just hours before President Donald Trump announced Maduro’s capture in January.
The news escalates the conversation about insider trading on prediction markets dramatically. Maduro trading on Polymarket’s global platform first came under the spotlight months ago; federal charges are something else entirely. The optics aren’t great, as they say.
New York, Illinois governors issue executive orders
Speaking (endlessly) of insider trading, the governors of two of the biggest regulated sports betting markets in the U.S., New York and Illinois, each issued executive orders in recent days to restrict state employees’ trading on prediction markets.
New York Gov. Kathy Hochul and Illinois Gov. JB Pritzker have both banned state employees and officials from using non-public information to bet on event contracts. “Getting rich by betting on inside information is corruption, plain and simple,” said Hochul. Both governors’ releases referred to high-profile controversies such as Maduro trading.
Hochul and Pritzker followed the lead of California Gov. Gavin Newsom, who issued a similar executive order last month. That’s three of the six most-populous states all moving decisively. Amid all of the above, too, does it feel like the issue may be coming to a head?
New York chooses Coinbase and Gemini as targets
While most states, including most recently Wisconsin, have made Kalshi their primary target in court, New York took a different approach. Attorney General Letitia James filed suit against Coinbase and Gemini, two relatively newer sports event contract participants, in state court.
James has asked the court to stop both platforms from operating in the Empire State unless and until they obtain licenses from the New York State Gaming Commission. She is also seeking fines of $2.2bn from Coinbase and $1.2bn from Gemini, among other restitution measures.
Her chief complaints are that not only are the two companies offering products tantamount to sports betting without a license, but they allow New Yorkers as young as 18 to trade on prediction markers, despite state law stipulating that people must be at least 21 to bet on sports online. James also took issue with the fact that the platforms allow trading on markets banned under state gaming law, such as betting on in-state college teams.
