2025 was the year of prediction markets, and they will continue to be a hot topic in the coming months.
Key Takeaways
- Major sports betting brands will make their presence known in prediction markets this year.
- Legal battles and lawsuits are likely to increase in 2026.
- Sports betting and gaming attorney Daniel Wallach foresees prediction market cases eventually reaching the Supreme Court.
From the very first sports event contracts being offered in 50 U.S. states to Kalshi becoming a household name to a pair of the biggest brands in the sports betting industry entering this new space, gaming was changed forever.
Peer-to-peer trades on finances, economics, politics, and pop culture burst onto the scene in 2024 and expanded in 2025 as sports became a major part of prediction markets. Users were able to pick “Yes or No” on a Super Bowl winner for the first time in 2025.
Since then, offerings on sports, including football, basketball, baseball, and more, have exploded on platforms like Kalshi and Crypto.com. Spreads, totals, parlays, and player props have enhanced trading options.
Popular daily fantasy sports operators Underdog and PrizePicks have partnered with trading exchanges to launch prediction markets alongside their player props. The UFC and NHL became the first U.S. sports leagues to enter marketing partnerships with prediction platforms.
However, that rapid growth and creation of sportsbook-like precision offerings has led to controversy and even legal battles in more than a handful of U.S. states.
So what will 2026 bring to this rising industry?
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Major players
Expansion is highly expected, and competition will take off in 2026, which could force some major changes and increased offerings in the space.
FanDuel and DraftKings launched their prediction platforms last month, just weeks after Fanatics released a similar app. There’s no question that the presence of the two U.S. gaming market-share leaders will affect the prediction market industry.
Through a partnership with CME Group, FanDuel Predicts is currently only available in five U.S. states, but the operator will expand financial markets to all 50 states and sports contracts in states without legal sports betting.
"We're giving our customers a new platform to engage with the world around them - whether that's the next Fed rate decision or a sports event,” said James Cooper, senior vice president, flywheel and new ventures at FanDuel. “This launch in five states will provide valuable insights into customer engagement with this new platform, enabling us to refine our approach as we expand to additional states in 2026."
DraftKings Predictions operates in 17 states, many of which don’t offer wagering.
“We will create an unparalleled customer experience, leveraging key strategic relationships like ESPN and NBCUniversal to provide an authentic, real-time product that moves at the speed of sports,” said Corey Gottlieb, chief product officer of DraftKings.
“Along with our operational footprint, marketing and analytics infrastructure, and advanced in-house technology, we believe we are uniquely positioned to lead this space over the long term.”
For now, both operators are offering limited sports contracts, focusing primarily on game winner and some spread markets on limited sports, with futures offerings slowly increasing. That is likely to be the trend as the year goes along.
Crowded space
Kalshi has shown that it has no plans of slowing down, and trade volumes continue to rise, as well as its marketing efforts. Polymarket, one of the largest global trading exchanges, has expanded its U.S. relaunch efforts in recent weeks and could be a big-time player in 2026.
Cryptocurrency platform Coinbase recently announced its venture into prediction markets through a partnership with Kalshi, and there could also be more companies exploring an entrance into the space this year.
MGM Resorts and Caesars, two major U.S. online and retail gaming operators, have not shown interest in getting involved in prediction markets, preserving their current gaming licenses and standing with regulators.
However, with FanDuel and DraftKings making inroads in non-legal sports betting states, could MGM and Caesars alter their stance?
Legal matters
Nevada was the first state to take action against prediction markets when regulators issued cease-and-desist orders to operators in March 2025. Kalshi countered by filing a lawsuit against the Silver State, claiming that it is regulated by the Commodity Futures Trading Commission and can operate in every state.
However, Nevada has been able to stay on top of Kalshi in the courts, following a federal judge's recent motion for stay denial.
That legal battle continues on into 2026, and several other states, like Connecticut, Ohio, New York, Massachusetts, and Maryland, are also attempting to force prediction markets out. Jurisdictions with legal sports betting claim prediction platforms are a form of illegal gaming because they aren’t licensed and don’t adhere to state regulations. Coinbase wasted little time challenging regulators.
Ultimately, that’s a decision that will be made by federal judges, and potentially the Supreme Court. But will any of that happen this year?
Court expansion
Sports betting and gaming attorney Daniel Wallach recently told Covers he expects 2026 court rulings to force Kalshi to geofence in at least four states, including Nevada and Massachusetts, which have taken hard legal stances against prediction market platforms.
“While this battle may ultimately head to the Supreme Court, Kalshi will continue to lose more cases than they win in the lower courts and be unsuccessful in persuading appellate courts to impose emergency stays while those cases wind their way through the court system,” Wallach said.
Wallach also projects six more U.S. states will bring litigation or be sued by Kalshi in 2026, joining a list of the current 10 states entangled in legal battles with the operator.
“By the end of 2026, nearly every single federal judicial circuit will have a Kalshi-type lawsuit, thereby increasing the likelihood of U.S. Supreme Court review due to a circuit split,” Wallach said.
Cases to watch
It’s unlikely that all of these legal cases will be solved in 2026, especially if more are litigated this year. However, there are a couple of approaches worth paying attention to, Wallach says.
Instead of issuing cease-and-desist orders, Massachusetts simply filed a lawsuit against Kalshi in state court, bypassing Kalshi’s efforts in other states to respond with lawsuits in federal court that “frame the case around a presumption issue,” Wallach said.
This could set a precedent moving forward.
“If Massachusetts wins its lawsuit and gets a preliminary injunction forcing Kalshi to exit Massachusetts, that could open the floodgates for other states to employ the same approach,” Wallach said.
Tribal nations could also take a much more aggressive approach in 2026. Wallach says Native American tribes will file additional lawsuits against Kalshi and other platforms for violations of the Indian Gaming Regulatory Act by offering sports contracts on tribal lands.
“These suits will intensify, especially if the Ninth Circuit reverses the San Francisco federal court ruling, which found that on-reservation prediction markets are protected by UIGEA,” Wallach said. “I expect the Ninth Circuit to reverse that decision and hold that sports event contracts - even though offered over the internet - constitute gaming activity on Indian lands based on existing case law and DOI regulations.”
