Prediction Markets Legal Tracker: Where Are Prediction Markets Legal in US States?

Intro

The legal predicament of prediction markets could be summed up with a sitcom title: “Who’s the Boss?”

And, with all due respect to Tony Danza, there’s no clear-cut answer at the moment, which is causing a lot of legal and regulatory chaos when it comes to both prediction markets and state-regulated online sports betting. 

A quick primer: prediction markets are federally regulated exchanges (formally called “designated contract markets,” or DCMs) that, at base, allow users to bet “yes” or “no” on a variety of event outcomes. Those outcomes started out with things like elections and economic data releases, but, beginning in late 2024, they started to include sports as well.

X+Y = litigation

This quickly attracted attention from state gambling regulators, who saw what prediction markets were facilitating and determined this was unauthorized, unlicensed, and unwanted online sports betting happening in their jurisdiction.

Some states are actively trying to shut this down, so cease-and-desist letters have been sent and lawsuits have been flying (you can follow all the action in our prediction markets timeline).

It’s become almost formulaic: Prediction Market X is suing/getting sued by Gambling Regulator Y. And, if you had to, you could boil the legal conflict down to one word: “preemption.” 

In short, does the federal oversight of prediction markets by the Commodity Futures Trading Commission (CFTC) trump that of state-level gambling regulators? 

That’s it, really: who’s the boss here? Is it the CFTC, which is permitting prediction markets like Kalshi and Polymarket to offer election and sports-related event contracts for trading? Or is it the states, which claim they call the shots when it comes to gambling (or in this case, alleged gambling)?

The state of the disunion

This tracker compiles and analyzes lawsuits involving prediction markets and state authorities across the U.S., providing a centralized, continuously updated view of a rapidly evolving legal landscape.

As platforms that allow users to trade on the outcomes of real-world events continue to grow, they have drawn increasing scrutiny from regulators, attorneys general, and private litigants. The result is a patchwork of legal challenges that differ widely by jurisdiction, making it difficult to follow developments without a structured, state-by-state lens.

Each entry in the tracker summarizes key cases, including the parties involved, core legal claims, procedural posture, and notable rulings or settlements.

Pending prediction market litigation by U.S. state

Prediction markets state-by-state legal status

*The state attorney general did issue an opinion in Oct. 2025 that said "a business model like you have described [a prediction market] constitutes gambling or gaming and requires licensure."

**There is a lawsuit involving Native American tribes, which have exclusive gaming rights in California, but not state gambling regulators.

***However, a recently passed bill will restrict prediction markets in the state.

#The state's attorney general didn't issue a cease-and-desist notice, but instead took their dispute directly to court.

##No C&D, as the state AG sued first, and was then subsequently sued herself.

###Another instance of a state AG going directly to the court system. The CFTC has also sued Wisconsin.

####Again, no C&D issued, but the state AG went straight to court.

Pending prediction market litigation and latest updates

The legal landscape for U.S. prediction markets has shifted from a theoretical debate over financial derivatives into an all-out jurisdictional war.

As platforms like Crypto.com and Novig pivot into sports, they have triggered a high-stakes collision between the CFTC’s claim of exclusive federal jurisdiction and state regulators determined to protect their local "police powers" and tax revenue.

This litigation tracker serves as the definitive dossier of record for the legal challenges defining the 2026 market expansion. From felony charges in Arizona to constitutional clashes in Utah, we provide regular updates on court dockets and precedent-setting rulings. Featuring expert analysis from Covers senior industry reporter Geoff Zochodne, this resource maps the "War of the Regulators" as it unfolds across the federal circuits.

(NOTE: The tracker focuses exclusively on the most notable legal battles between the states and prediction markets; we'll include instances where states have issued cease-and-desist letters without further legal proceedings, but those examples will be kept separate and listed below the main state-vs.-prediction market showdowns.)

Prediction Market Litigation by State

Arizona

The latest: Things have turned ugly in Arizona, where Attorney General Kris Mayes has leveled 20 criminal counts against Kalshi. Mayes alleged Kalshi accepted wagers on professional and college sporting contests, proposition bets on player performance, and elections. Kalshi CEO Tarek Mansour labeled the charges "deeply flawed" gamesmanship. The CFTC, meanwhile, obtained a temporary restraining order against Arizona in April, blocking the state from pursuing its criminal charges against CFTC-regulated prediction markets. A preliminary injunction was then granted in May.

Geoff Zochodne analysis: A case that could considerably up the ante for Kalshi and prediction markets, because we’re talking criminal charges on the marquee, not an arguably more academic exercise of determining whether a CFTC-regulated exchange must abide by state gambling laws. If you game it out to the worst possible scenario for prediction markets, there’s the potential for an operator to be labeled a criminal enterprise. Everything only alleged, charges must be proven in court, etc., but this feels quite serious. Which probably explains why Kalshi tried to stave off the action altogether, and why the CFTC has already intervened.

Connecticut

The latest: After Connecticut issued a cease-and-desist in late 2025 calling event contracts "unlicensed gambling," Kalshi filed suit. The court has stayed enforcement while it determines if federal law preempts state consumer protection claims. The CFTC has also taken legal action against the state for allegedly encroaching on the federal agency's turf.

Geoff Zochodne analysis: This is much more familiar territory for prediction markets and state gambling regulators, but still some interesting quirks to note. If you look outside the court, at Connecticut's state-regulated gambling framework, you'll see who is permitted to offer any form of gambling is tightly restricted. And two massively interested parties in this litigation would be the Connecticut-based Mashantucket Pequot Tribal Nation and Mohegan Tribe, the respective owners of the Foxwoods and Mohegan Sun casinos. These are forces in both Connecticut politics and the traditional, brick-and-mortar gambling world, and casino-operating tribes have no love for prediction markets. So, while the state is pursuing a crackdown itself, it probably has two big fans rooting for them.

Illinois

The latest: Coinbase is fighting the Illinois Gaming Board in federal court. The company's legal team accused the state of "gaslighting" the public by categorizing CFTC-regulated swaps as sports betting. Oral arguments focused on whether Illinois can impose its own licensing regime on a federal exchange. The CFTC, meanwhile, is trying to shut it all down with its own lawsuit.

Geoff Zochodne analysis: Again, with all due respect to the parties involved in this legal matter, I think what's more interesting here is what's happening outside of the courtroom. Illinois is a massive market for online sports betting, with some of the most rabid sports fans in the nation. However, state lawmakers have increasingly hiked the cost of doing business in Illinois for state-regulated bookmakers. The revenue tax rate was hiked and then a per-bet tax was layered on top. Online sportsbook operators have tried to pass some of the added costs on to customers, and it's looking like that may be prompting bettors to place fewer wagers with state-regulated sportsbooks. Which makes Illinois the rare state with a relatively robust state-regulated market for online sports betting that could be ripe for prediction market cannibalization.

Iowa

The latest: Kalshi sued Iowa AG Brenna Bird just one day before she was expected to take action against Kalshi. The prediction market operator alleges that during a recent meeting, Iowa officials signaled imminent enforcement that would violate the Supremacy Clause. The CFTC has sued Iowa as well.

Geoff Zochodne analysis: Another attempt by Kalshi (with eventual backup from the CFTC) to preempt state gambling law. Also: the ability of state gambling regulators to crack down on their business. Curiously, Kalshi claimed it was blindsided by Iowa's intent. To quote our story on the initial filing of the lawsuit:

"Kalshi said it was caught off guard when it attended a recent meeting with Iowa Attorney General Brenna Bird, believing it to be a discussion about pending tax legislation. Instead, Kalshi claimed its representative was grilled by a panel of attorneys challenging Kalshi’s assertion that its federally regulated contracts did not conflict with Iowa state law."  

Maryland

The latest: Maryland has been successful in court thus far. To wit: Kalshi was denied an injunction against the state after being served with a cease-and-desist letter by local regulators. A lower court more or less sided with the state on the question of whether the Commodity Exchange Act preempts state gambling laws. Now, all eyes are on Kalshi's appeal to the Fourth Circuit, with oral arguments held in early May.

Geoff Zochodne analysis: Maryland was the first state to really draw blood versus prediction markets, but the state has yet to force a shutdown of sports or election-related event contracts. That, however, is where things are heading pending a reversal later this year. So, a hugely consequential decision looms. Moreover, it looms closer to D.C. than most other jurisdictions, and federal lawmakers are increasingly concerned and interested in doing something about the CFTC-regulated exchanges.

Massachusetts

The latest: Polymarket filed a lawsuit against AG Andrea Joy Campbell after a state judge denied Kalshi's request to delay a sports market ban. Like Kalshi, Polymarket argues that prediction markets are federally regulated by the CFTC.

Geoff Zochodne analysis: While technically a separate case, wanted to duly note here that the CFTC announced on April 24 that it filed a so-called "amicus brief" in connection with Kalshi's legal fight with the commonwealth.

"The amicus brief outlines the history and structure of the Commodity Exchange Act and describes how the comprehensive scheme designed by Congress preempts state laws as applied to CFTC-regulated markets," a press release said.

And so, worth remembering here that the feds may try to involve themselves again if things turn sour for Polymarket.

Michigan

The latest: Michigan AG Dana Nessel filed a civil enforcement action against Kalshi on March 6. Kalshi’s competitor, Polymarket, countered with its own lawsuit against the AG. State regulators previously warned that operating prediction markets could jeopardize access to the state.

Geoff Zochodne analysis: Michigan sports betting regulators haven't been shy about hitting companies with cease-and-desist letters, so it's interesting they deferred to the state AG to launch the official legal shot across the bow here. That, though, has proven to be a successful tactic in Massachusetts, so it makes sense. However, the immediate operator lawsuit that followed from Polymarket makes it a little unclear as to who will get a crucial enough decision first. 

Nevada

The latest: After initially siding with Kalshi, a Nevada court eventually reversed itself and issued a temporary restraining order against the company. Later, the court paved the way for a ban on the trading of sports-, election-, and entertainment-related event contracts. Kalshi has since removed those markets in the Silver State.

Geoff Zochodne analysis: It's been a bit of a rollercoaster ride in Nevada. Kalshi got a big win here in early 2025, but the judge later undid that decision, and now Kalshi has had to curtail its operations in the state accordingly. Now, it's definitely advantage Nevada. A recent appeals court hearing sounded, well, kinda bad for prediction markets as well. And while it can be a dangerous game to try to make conclusions based on the questions asked by judges during these hearings, well, it really did sound bad. Given Nevada is the ancestral home of legalized sports betting in the U.S., the state was always going to fiercely defend what it views as its turf.

New Jersey

The latest: Kalshi argued in late July 2025 that as a federally regulated exchange, NJ is barred from regulating its contracts. NJ regulators cited Kalshi for offering unauthorized sports wagering, particularly on local collegiate events. A split-decision in appeals court went in Kalshi's favor in April 2026.

Geoff Zochodne analysis: While one gambling-friendly state, Nevada, has racked up wins against prediction markets, in another, New Jersey, it's gone the other way. Kalshi has now won in district and appeals court against Garden State regulators, which stands in stark contrast to the company's legal fortunes in Nevada. It's interesting, sure, but what's really important is that these differences of opinions among federal appeals courts may need to be resolved by the U.S. Supreme Court. And if and when SCOTUS gets involved, that's when you may get the one legal decision to rule them all.

New York

The latest: Kalshi filed suit in late October 2025 seeking to keep Empire State regulators from penalizing the platform following a cease-and-desist order. Kalshi maintains only the CFTC can regulate the exchange.

Geoff Zochodne analysis: Another state in which the CFTC has seen enough. The federal agency announced on April 24 that it was suing in New York to stop state regulators there from going after CFTC-regulated prediction markets. New York is a crucial legal jurisdiction in the U.S., so it makes sense the CFTC wants to make a stand in the state.

"In its complaint against New York, the CFTC seeks a declaratory judgment that federal law grants it exclusive authority to regulate event contracts and requests a permanent injunction preventing the state from enforcing preempted state laws against its registrants," a press release noted.

Ohio

The latest: The Ohio Casino Control Commission hit Kalshi with a cease-and-desist letter in March 2025, alleging the prediction market operator's sports event contracts were prohibited by local law and insisting they be pulled from the Buckeye State. Kalshi then fired off a lawsuit, but was denied a preliminary injunction. Kalshi subsequently appealed to the U.S. Court of Appeals for the Sixth Circuit. Meanwhile, the Ohio Casino Control Commission issued notice of its intent in April 2026 to fine Kalshi $5 million for allegedly offering illegal gambling.

Geoff Zochodne analysis: The Ohio Casino Control Commission saw this one coming, with members given fair warning that the lawsuits would fly after the cease-and-desist letters were mailed. Kalshi also lost at the lower-court level and has yet to get that decision paused, which leaves open the possibility of the prediction market operator curbing its business in the Buckeye State. Which bring us to... 

Tennessee

The latest: Kalshi won a key victory when a federal judge agreed that sports-event contracts are likely "swaps" under the CFTC. The ruling prevents Tennessee from enforcing betting laws against the platform for now. Tennessee has appealed to the Sixth Circuit appeals court.

Geoff Zochodne analysis: A big win on the "swaps" definition, for sure. However, the fact that Kalshi is winning against Tennessee while losing against Ohio means you've got some difference of legal opinion within the Sixth Circuit's turf. So, that makes the appeal of the Tennessee decision all the more intriguing and consequential, perhaps, for both sides.

Utah

The latest: Kalshi sued Utah officials in late February, arguing the state is intruding on federal derivatives authority. The move follows public statements by Utah leaders signaling imminent anti-gambling enforcement.

Geoff Zochodne analysis: OK, so not really a true "legal" analysis here, but I'm not sure there's a more hostile environment for anything that even approaches "gambling" than Utah. Nothing's legal there! A win here would be huge for prediction markets. This would be like an "Appalachian State takes down Michigan as 33-point underdogs"-level upset to me. Godspeed to all involved.