Lead

Ohio’s stalled push to legalize online casinos has a new proposal attached to it: allow digital operators to run promotions only when those promotions direct players toward the state’s existing physical casinos and racinos. State Rep. Brian Stewart outlined the approach during an iDevelopment and Economic Association panel on Friday. He said an online-casino market could bring Ohio as much as $400 million in annual tax revenue, according to GamblingNews.

The proposal comes after months of limited progress on Ohio iGaming legislation. The issue may also remain unresolved as the state’s political calendar changes: Gov. Mike DeWine could leave office before the matter is settled, while contenders for the governorship have emerged ahead of the midterms. The reporting says one of DeWine’s rivals may be more favorable toward online casinos.

Who Wins Under Stewart’s Model

Stewart’s approach would make the connection between online promotions and physical venues central to an iGaming market. Rather than relying on traditional online bonuses, promotions offered by iGaming operators would be intended to send foot traffic to a casino or racino in Ohio.

Stewart has also argued that future online-casino licenses should be limited to the state’s existing racinos and casinos. His stated rationale is that those operators have already disbursed millions in support of local economies and communities. Under that view, online gaming would be linked to businesses already operating within Ohio’s gaming sector rather than treated separately from the land-based market.

The proposal therefore places particular importance on the role of existing casino and racino operators. It frames their physical properties as part of the policy objective, with online promotions designed to support visits to those locations.

Promotions as a Traffic Valve, Not a Growth Lever

The distinction in Stewart’s proposal is between promotions that encourage online gambling and promotions tied to a land-based venue. The source describes the latter as an alternative to traditional bonuses offered by online casinos.

That would shift the purpose of a promotion under the proposed framework. Instead of being used solely as an online incentive, a promotion would need to be connected to traffic at a physical casino or racino. The reported policy objective is clear even though the available account focuses on Stewart’s proposal rather than detailed statutory language.

As presented, the proposal is a draft law under consideration. Its central feature is the requirement that iGaming promotions support land-based gaming businesses in the state. That leaves the measure’s progress dependent on the legislative process and on whether lawmakers and affected interests can agree on its terms.

Stakes Framing

The revenue case is a major part of Stewart’s argument. He has said online casinos could generate as much as $400 million annually in tax revenue for Ohio. The reporting characterizes online casinos as a significant gambling-tax contributor because they can generate interest and spending that produce payments to state coffers.

Ohio’s sports-betting tax receipts provide the comparison cited in the reporting. Since online and retail sports betting launched on January 1, 2023, Ohio has collected $600 million in sports-betting tax. Stewart’s estimate for online casinos is an annual projection, while the sports-betting figure covers the period since that launch.

The proposal also raises responsible-gambling questions. The source says advocates are concerned that increased spending on online gambling could result in greater harm for players. It further notes that removing direct bonuses intended to encourage online play could reduce some adverse consequences, because bonuses are usually used to push players toward excessive gambling.

That creates a policy tradeoff at the center of the debate. Supporters can point to the potential tax revenue and a structure intended to benefit physical venues, while responsible-gambling advocates focus on the possible harms associated with increased online gambling spending.

Responsible-Gambling Advocates Sound a Caution

Derek Longmeier of the Problem Gambling Network of Ohio has raised a broader concern about gambling behavior in the state. According to the reporting, he warned that the start of the NFL season could lead to more harmful behavior across Ohio.

That warning concerns the wider gambling environment rather than a stated position on Stewart’s promotion proposal. Still, it places the iGaming discussion in a setting where responsible-gambling advocates are emphasizing the risks that can accompany increased gambling activity.

The available reporting does not present Longmeier’s warning as direct opposition to the proposed link between online promotions and physical venues. Instead, it underscores that any consideration of expanded online gambling would take place alongside concerns about player harm and excessive gambling.

A Deadlock Still Waiting to Break

Stewart has said his proposal is intended to balance competing interest groups and avoid internal strife from the start. He has presented that balance as a way to give the draft law a better chance of breaking the deadlock that has limited prior progress on Ohio online-casino legislation.

Restricting future online casinos to existing racinos and casinos, while tying promotions to physical locations, is central to that effort. The design seeks to align an online-casino framework with the interests of land-based businesses that already operate in Ohio and have supported local communities.

Whether that approach produces sufficient support remains a legislative question. The reporting describes a proposal under consideration, not a completed law, and its future depends on how lawmakers and relevant stakeholders respond.

What It Would Mean for Ohio’s Gaming Landscape

If enacted as Stewart has described it, the framework would make online casino promotions part of a strategy to direct players toward physical casinos and racinos. That would connect the digital product to land-based venues and place existing operators at the center of the proposed market.

For the state, the proposal is tied to Stewart’s estimate of up to $400 million in annual tax revenue. For responsible-gambling advocates, it raises questions about whether additional online gambling spending could increase harm, even if direct online bonuses are limited or redirected.

The proposal’s core idea is therefore straightforward: Ohio could consider online casinos while requiring the promotional side of the business to support land-based gaming properties. Its eventual effect would depend on the final legislation and whether the measure can move beyond the deadlock described in the reporting.

The post Ohio Online Casino Plan Puts Physical Venues at the Center appeared first on ReadWrite.

DraftKings built a machine-learning model in 2023 using customer betting records to identify which gamblers were more likely to respond to promotions by betting – and losing – more, according to a New York Times investigation published Sept. 19.

The reporting draws on internal documents and interviews with dozens of former DraftKings employees, several of whom said they worried the company’s targeting efforts were harming problem gamblers.

How the Scoring Model Worked

At the time DraftKings built the model, the company was spending hundreds of millions of dollars annually on promotional incentives – free bets and bonuses pushed through emails and phone alerts – without a clear picture of which offers actually worked, according to the Times.

The model assigned each customer a score based on betting habits; the higher the score, the more money that gambler was predicted to lose for every promotion sent their way. Jayden Butts, a DraftKings data analyst, was assigned to test the model roughly a year into his job, prioritizing free bets and bonuses for the customers flagged as likely to lose the most, the Times reported.

Butts told the Times the underlying logic amounted to searching for traits indicating a good investment, and that by that financial logic, a problem gambler would qualify. Six former employees said DraftKings has since continued refining its data-science methods to direct promotions toward losing gamblers in ways that encourage more betting, the Times reported.

Separately, four other former employees told the Times that DraftKings stalled or squashed a parallel effort to use similar technology to predict which customers might be developing a gambling problem based on their betting activity. The excerpt reviewed does not include a response from DraftKings.

A Wider Industry Tension

DraftKings makes money when its customers lose money, and the Times frames the model as part of a broader shift in which gambling operators have adopted the same behavioral-data techniques Silicon Valley firms spent years perfecting to keep users clicking. That tension – using predictive data science to maximize promotional returns while an equivalent tool for flagging at-risk bettors reportedly went nowhere – sits at the center of the investigation’s findings.

The reporting lands amid mounting scrutiny of sportsbook targeting practices more broadly, including congressional pressure over FanDuel’s VIP program and a push from the MLB players’ union to ban personalized sportsbook marketing. Whether that pressure extends to DraftKings’ own promotional algorithms, following a quarter in which the company’s revenue already fell, is likely to be the next question regulators ask.

The post Loss Predictions Shaped DraftKings’ Betting Promotions appeared first on ReadWrite.

Hyperliquid’s open interest reached a record $16.36 billion, according to BlockBeats, as the exchange’s push beyond crypto perpetual futures into stocks and prediction markets drew fresh trading activity to the platform.

The figure tops the previous record, which was set on September 18 of last year. BlockBeats attributed the increase directly to Hyperliquid’s expanding product lineup rather than a single asset class or trading event.

How HIP-3 and HIP-4 Fed the Number

Hyperliquid introduced HIP-3 in October 2025, letting third parties deposit HYPE to launch their own perpetual futures markets rather than relying solely on listings from the core team. Markets built on HIP-3 now include contracts tied to U.S. stocks, gold, crude oil, the S&P 500 and private companies such as SpaceX.

As of early September, cumulative trading volume across HIP-3 markets had exceeded $548 billion, roughly 30% of Hyperliquid’s total trading volume over the prior 30 days. That’s a meaningful share for a product line that didn’t exist a year ago, and it suggests third-party-built markets are no longer a side experiment but a core driver of activity on the exchange.

Hyperliquid layered on a second expansion in May 2026 with HIP-4, a framework for prediction-market products tied to the outcomes of specific events. In late August, the company opened HIP-4 to third-party launches as well, mirroring the builder-driven model already running on HIP-3.

From Perpetuals to General Trading Infrastructure

The shift matters because it repositions Hyperliquid from a crypto-only derivatives venue into something closer to a general-purpose on-chain trading platform, one where equities exposure, commodities and event contracts sit alongside standard perpetual futures. The expansion into private-company contracts and event-based products puts Hyperliquid in territory that regulated U.S. platforms have approached far more cautiously, and it raises the same questions about event-contract oversight that have followed prediction markets more broadly.

Other exchanges have been moving in the opposite direction – building derivatives on top of prediction-market infrastructure rather than folding prediction markets into a derivatives platform, as seen when Kalshi launched crypto perpetual futures under CFTC oversight. The primary source material on Hyperliquid’s record open interest doesn’t include competitor market-share figures or a regulatory determination on its own products, so any direct comparison between the two approaches remains a matter of structure rather than confirmed enforcement outcomes.

The post Hyperliquid’s Product Expansion Drives Record Open Interest appeared first on ReadWrite.

Underdog has filed a federal lawsuit against Connecticut officials after the state ordered the company to stop offering sports-event contracts, escalating a fight over who has authority to regulate prediction markets. The company is one of nine firms hit with a cease-and-desist order from the Connecticut Department of Consumer Protection.

The DCP’s order also named Polymarket, Coinbase, Crypto.com, Robinhood, Prophet X, Novig, Webull, and Gemini, directing all nine to stop advertising sports-event contracts and to let Connecticut users withdraw existing funds. Underdog is asking a federal judge to draw a firm line around what the state can and cannot regulate.

What Underdog Wants From the Court

Underdog filed its 39-page complaint in the U.S. District Court for the District of Connecticut, naming the DCP and Attorney General William Tong as defendants. The company is asking the court to declare that Connecticut cannot apply its state gaming regulations to Underdog’s event contracts and to issue a permanent injunction blocking state officials from enforcing gaming law against the company’s prediction markets.

Underdog also wants the court to block further Connecticut efforts to regulate its prediction-market products, rather than limiting relief to the specific contracts named in the cease-and-desist order. The requested relief would extend beyond a challenge to a single enforcement action.

The Jurisdictional Fight Underneath It

Underdog’s core argument is that it operates federally regulated designated contract markets that list live-event contracts for trading, which it says places regulatory authority with the CFTC. In Underdog’s reading, that includes the CFTC’s authority to decide whether certain gaming-related event contracts should be prohibited as contrary to the public interest, a decision the company argues Connecticut cannot make independently.

Connecticut officials see it differently. State regulators contend the platforms bypass consumer protections by allowing bets from people under 21, wagers from individuals on self-exclusion lists, and contracts tied to in-state college teams. They say those activities violate Connecticut gaming law regardless of how the contracts are characterized under federal regulation.

Underdog is not alone in making the federal-preemption argument in Connecticut. The CFTC and companies including Robinhood have filed actions in federal court challenging the state’s enforcement push, arguing that federal oversight of designated contract markets overrides state gambling rules. Connecticut’s broader campaign against prediction markets has also touched its separate dispute with Kalshi over whether sports contracts require a state gambling license.

A Patchier Picture Elsewhere

The Connecticut fight is not happening in isolation. Montana recently paused enforcement against Kalshi, agreeing not to pursue enforcement, investigation, cease-and-desist proceedings, or other administrative action while the company seeks a rehearing before the Ninth Circuit. That followed a Ninth Circuit ruling that allowed Nevada to ban Kalshi and other prediction-market operators. The differing outcomes, detailed in ReadWrite’s coverage of the Missouri and Montana disputes, underscore how unsettled the legal terrain remains.

In Connecticut, the central issue is whether the federal court will accept Underdog’s argument that CFTC oversight of its designated contract markets forecloses state gaming enforcement, or whether Connecticut’s consumer-protection concerns support the state’s position. The case adds to the wider dispute over whether sports-event contracts should be regulated as federally overseen financial products or as sports betting under state gaming laws.

The post Underdog asks court to curb Connecticut’s prediction-market crackdown appeared first on ReadWrite.

The Tunica-Biloxi Tribe of Louisiana launched a prediction market app on Sep. 18 through its newly formed subdivision, SaltTrade Derivatives, a move Kalshi describes as the first time a sovereign Tribal nation has entered the prediction market business through its own enterprise.

SaltTrade Derivatives is Tribal-owned. It runs the mobile app, along with branding, marketing and customer experience, while Kalshi supplies the plumbing underneath: matching, clearing, custody and surveillance across its federally regulated exchange, according to a post on the Kalshi website written by CEO Tarek Mansour.

That structure gives SaltTrade Derivatives something it couldn’t easily build alone – access to a nationwide pool of buyers and sellers from launch day. Kalshi frames prediction markets as digital financial exchanges rather than house-banked wagering, arguing it collects transaction fees rather than profiting when customers lose, and doesn’t limit accounts simply for winning too often.

Framing It as Addition, Not Competition

Mansour’s post leans heavily on the argument that prediction markets and Tribal gaming serve different customers entirely. He points to Tribal gaming’s record $46.2 billion in gross gaming revenue in fiscal 2025 as evidence that the sector kept growing even as prediction markets expanded in the same period.

He also cites a 2025 National Indian Gaming Commission finding that less than 9% of Tribal gaming operations generate more than half of all Indian gaming revenue, while the majority of facilities split just 5% between them – a gap Kalshi suggests prediction market ownership could help close for Tribes left out of the existing gaming economy.

Not every Tribe sees it that way, and Tribal leaders have warned Congress that event contracts amount to gambling encroaching on exclusive gaming rights. Mansour’s post acknowledges as much, stating that Tribal sovereignty means different nations will reach different conclusions on the same question.

A Bet on Shared Liquidity

Kalshi’s pitch rests on the idea that fragmented markets produce worse pricing than one shared exchange. The company points to CME, ICE and Nasdaq all moving into prediction markets as validation that unified national liquidity, not isolated regional pools, is where the category is heading.

Kalshi also claims, citing unnamed industry CEOs, that roughly 90% of prediction market volume in several states came from accounts with no sportsbook activity – a data point it uses to argue the audience is genuinely distinct from sports betting. That claim comes from Kalshi’s own post rather than independent verification.

The launch lands amid a broader legal fight: Kalshi has faced setbacks over event contracts on Tribal lands in separate litigation, and other Tribal nations remain in active disputes with the company, as reported by Sportico. Tunica-Biloxi’s deal gives Kalshi an example of a Tribe taking a partnership approach while other Tribal nations pursue litigation, and Mansour has encouraged other Tribal groups to follow its lead.

The post Kalshi and Tunica-Biloxi Launch Tribal Prediction Market App appeared first on ReadWrite.

Genius Sports has launched Prediction.com, a consumer platform built through its Legend business that lets users compare equivalent event contracts across multiple prediction-market venues and track how probabilities shift as events play out.

The platform brings markets and pricing from major prediction-market platforms into one destination, according to a Genius Sports press release. Users can view how equivalent contracts are priced across different venues, while the platform is designed to help consumers discover markets and follow their development as events unfold.

Prediction.com also includes a proprietary pricing engine for comparing multi-leg contract combinations across venues. For sports markets, the platform combines Genius Sports’ live game data with real-time prediction-market pricing, allowing users to follow play-by-play action alongside changing probabilities, prices and market signals in the same view.

Legend’s Consumer Bet

The launch runs through Legend, Genius Sports’ consumer media and technology business, whose operations include a portfolio of sports brands reaching millions of fans. Prediction.com builds on Legend’s existing consumer and comparison technology while establishing a new flagship brand for the prediction-market category.

Genius Sports says the platform addresses fragmentation in the consumer experience as the category develops. The company already provides official sports data and integrity services to prediction-market platforms. With Prediction.com, it is creating a direct consumer presence where users can discover markets, compare contracts and pricing, follow live events and track outcomes.

A Crowded, Unsettled Category

Prediction.com arrives as the prediction-market category expands and consumers have access to a growing range of markets and platforms. Genius Sports describes the consumer experience as fragmented, with market discovery, contract comparisons and live tracking often spread across different destinations.

Prediction.com’s focus is comparison and aggregation: a single destination where consumers can review pricing and information available across multiple prediction-market platforms. The platform also provides a destination through which prediction-market platforms can be discovered by consumers.

Genius Sports says it will continue to expand Prediction.com’s coverage, functionality and partner integrations as the global prediction-market ecosystem develops. The company has not detailed a timeline or identified additional partners for those planned expansions.

The post Genius Sports brings prediction markets into one consumer hub appeared first on ReadWrite.

Missouri Attorney General Catherine Hanaway is pursuing cease-and-desist action against prediction-market companies operating in the state, while Montana has agreed to pause enforcement against Kalshi under a stipulation filed in federal court. The developments, reported September 18, 2026, mark the latest moves in a state-by-state fight over how sports event contracts should be regulated.

Hanaway told Heartland News that she views sports event contracts as gambling under Missouri law regardless of how prediction markets structure their fees compared with traditional sportsbooks. She said the products function the same way FanDuel and other licensed operators take bets on sporting events, even if the fee model looks different on paper.

Missouri’s Enforcement Path

Missouri’s stated goal is to bring prediction-market companies under state gaming law and require them to pay gambling taxes. Hanaway said her office is open to a settlement and is hopeful one can be reached, pointing to Kentucky as a state that pursued enforcement earlier this year and is now close to a deal.

If no agreement materializes, Hanaway said Missouri will sue. She also raised consumer-protection concerns tied to Kalshi and Polymarket, including age verification and the potential for insider trading, and acknowledged that prediction-market companies could respond by filing suit against the state in federal court.

Montana’s Stipulation With Kalshi

Montana’s arrangement with Kalshi is procedural rather than a resolution on the merits. Under a joint stipulation filed September 17, Montana agreed not to pursue enforcement, investigations or cease-and-desist proceedings against Kalshi’s event contracts until the later of a denial of further Ninth Circuit review or an en banc decision. Kalshi, in turn, is dropping its Montana lawsuit while that non-enforcement window holds.

Once the review period ends, Montana must give Kalshi 30 days’ written notice before taking any action. The stipulation is tied directly to Kalshi’s September 9 petition seeking rehearing of the Ninth Circuit’s August 28 ruling in the consolidated Nevada case, keeping Montana’s posture linked to how that appellate fight unfolds.

A Wider State-Federal Standoff

Missouri and Montana are just two pieces of a much larger dispute over whether states can apply gambling law to federally regulated event contracts. Connecticut, New York, Arizona, Iowa and Massachusetts all have active prediction-market matters in progress, and the Ninth Circuit recently sent a challenge brought by two California tribes back to the district court for further proceedings.

On the federal side, the CFTC has broadened its no-action relief for software providers that give users access to event-contract markets. The September 17 letter lets qualifying passive providers offer order-routing interfaces to registered exchanges without registering as introducing brokers, so long as they don’t hold customer assets, generate buy or sell signals, or control order execution.

What Comes Next

Missouri’s path forward hinges on whether Hanaway’s office can reach a settlement similar to Kentucky’s; absent that, litigation appears likely. Montana’s non-enforcement commitment remains tied to the outcome of Kalshi’s Ninth Circuit rehearing bid, with the 30-day notice requirement setting the clock once that process concludes. Neither state action resolves the underlying question of whether sports event contracts are gambling products or federally preempted derivatives – a question still working through courts in multiple states and, potentially, the U.S. Supreme Court.

The post States Clash Over Whether Event Contracts Are Gambling appeared first on ReadWrite.

BMLL and Kalshi have formed a strategic partnership that folds Kalshi’s historical prediction-market data into BMLL’s standardized capital-markets data environment, giving quantitative research teams, macro funds, and systematic hedge funds a structured path into Kalshi’s market data for the first time.

BMLL describes itself as an independent provider of harmonized, continually engineered historical Level 3, Level 2, and Level 1 data and analytics for capital markets. Under the deal, BMLL will normalize Kalshi’s historical order book into the same unified schema it already uses for CME Event Contracts, according to the announcement on Markets Media.

That standardization is meant to eliminate the manual work of pulling piecemeal data from disparate APIs, a process the companies say has consumed years of engineering time that could otherwise go toward strategy modeling. Kalshi’s contracts trade between 1¢ and 99¢ and, because they represent financially committed capital, the announcement frames those prices as well-calibrated real-world probabilities rather than raw sentiment.

Why BMLL and Kalshi Say Institutions Need This

Paul Humphrey, CEO of BMLL, said: “Our systematic hedge fund and quantitative clients have shown urgent and active demand for high-fidelity, historical prediction market data to support macro-level research.”

He added that normalizing Kalshi’s dataset to the CME Event Contracts schema removes the burden of data engineering, letting quant teams bypass complex API parsing and access macro signals directly through Snowflake, SFTP, or the BMLL Data Lab.

Andy Ross, Head of Institutional at Kalshi, said institutional participants increasingly need better ways to price and manage event-driven risk directly, rather than relying solely on proxy assets, and want to understand how prediction-market prices can inform their view of traditional financial markets.

What the Data Is Built For

The normalized feed is designed to let researchers backtest and calibrate models around Federal Reserve rate decisions, CPI releases, and GDP prints. The companies also point to uses in generating cross-asset alpha, hedging regulatory risk across portfolios, and building proprietary prediction indices and forward curves, with an eye toward emerging products like Multivariate Events and Perpetual Futures.

Kalshi remains a CFTC-regulated Designated Contract Market, and the partnership positions its event-contract data as a peer dataset to CME’s rather than a separate, experimental category. For institutional data teams, that shared schema is the practical payoff: one less pipeline to build before prediction-market prices can sit alongside the rest of a macro research stack.

The post Quant Teams Get Standardized Access to Kalshi Historical Data appeared first on ReadWrite.

The Commodity Futures Trading Commission issued new guidance on September 17 that could widen online access to cryptocurrency and prediction-market trading by exempting certain software providers from broker-registration requirements. The agency said passive software providers partnering with regulated entities will not face enforcement penalties for failing to register as brokers, provided they never take custody of a user’s assets.

That single condition – no custody, ever – is the hinge the whole guidance turns on. It separates companies that simply route orders to regulated partners from those that handle money directly, and it’s the distinction the CFTC is now using to decide who needs a broker license and who doesn’t.

Who This Actually Affects

Under the prior framework, any company that solicited or accepted trade orders, sent them along to futures commission merchants, and collected fees or commissions for doing so was required to register as a broker. That requirement covered a wide swath of the crypto-adjacent software layer – wallets, apps, and interfaces that never touched customer funds but still moved orders around.

The new guidance carves those companies out, so long as they stick to a passive role and partner with an already-regulated entity. It affects software providers, the regulated trading partners they plug into, crypto-wallet users, and prediction-market participants who access markets through third-party apps rather than going directly to a designated contract market. Per the guidance, the exemption stays in place until the CFTC finalizes a rulemaking or issues different guidance – meaning it’s a working policy, not a permanent rule.

The timing isn’t incidental. The guidance landed two days after a bipartisan group of senators moved to block crypto-market legislation the industry had been pushing for. CFTC Chairman Michael Selig and Securities and Exchange Commission Chairman Paul Atkins have both said they intend to implement digital-asset rules without waiting on Congress, and this guidance reads as an early example of that approach in practice.

How the Passive-Software Exemption Works

The mechanics are narrower than the headline suggests. A software provider qualifies for the exemption only if it partners with a regulated entity and never takes custody of user assets – the CFTC didn’t extend the carve-out to platforms that hold funds, make trading recommendations, or operate independently of a registered intermediary.

This isn’t the CFTC’s first move in this direction. In March, the agency granted a no-action letter to Phantom Technologies Inc., waiving the broker-registration requirement for its wallet software. Phantom has partnered with Kalshi to offer prediction-market trading to more than 20 million crypto-wallet holders, making it the clearest existing example of the model the new guidance now generalizes.

Phantom CEO Brandon Millman said the company had built the foundation for platforms that neither custody user assets nor make trading decisions on their behalf, framing the approach as software built to protect consumers while pairing users with regulated partners to give them safer access to the financial services they’re looking for. That framing – protection through structure rather than through direct oversight – is essentially what the CFTC just wrote into broader guidance.

Other Platforms Already Running the Model

Phantom isn’t alone. Crypto.com and ProphetX have both adopted comparable business models and operate CFTC-registered platforms, meaning the guidance validates an approach that was already gaining traction rather than inventing a new one from scratch.

Aaron Brogan, founder of Brogan Law, which specializes in emerging companies and regulated businesses, said the guidance could allow prediction markets to be placed nearly anywhere. He added that any product capable of trading on a designated contract market could potentially be covered by the new position – a scope reading that, if it holds, extends well beyond wallet apps to any software layer sitting between a user and a regulated exchange.

That’s a meaningfully broader claim than the guidance’s plain text guarantees, and it’s worth treating as an attorney’s interpretation rather than settled CFTC policy. But it captures why the industry is paying attention: the exemption’s language about “passive software” doesn’t name specific product categories, leaving room for a lot of different applications to try fitting themselves into the carve-out.

What the Guidance Doesn’t Settle

The CFTC framed this explicitly as a temporary position – it remains in effect only until the agency completes a formal rulemaking or issues other guidance that supersedes it. That’s a meaningful caveat for any company building a business around the exemption, since the ground rules could shift once a rulemaking process actually gets underway.

The primary source doesn’t specify a timeline for that rulemaking, and no date has been set publicly as of this guidance’s release. Companies relying on the no-action position are, for now, operating under a policy the agency could revise or replace without much notice.

Why the Access Question Matters

The practical effect, if the guidance holds, is more entry points for prediction-market and crypto trading without each new entry point requiring its own broker registration. Phantom’s Kalshi partnership already gives more than 20 million wallet holders a path into CFTC-regulated trading through an interface most of them were already using for something else – moving crypto, not placing trades.

Crypto.com and ProphetX operating comparable setups on registered platforms suggests this isn’t a one-company exception but a pattern the CFTC is now willing to formalize across the sector. Whether that translates into a meaningfully larger user base for event contracts and crypto products depends on how many additional software providers structure themselves to qualify – and how aggressively regulated intermediaries want to expand their own distribution networks through third-party apps.

What’s clear from the guidance itself is narrower: the CFTC has drawn a line at custody, not at market access generally, and it’s betting that line is enough to protect consumers while letting more software companies plug into regulated trading without becoming brokers themselves.

What Comes Next

The guidance stays in force until the CFTC either finalizes a rulemaking or issues new guidance that replaces it – the agency hasn’t specified when that might happen. Until then, passive software providers partnering with regulated entities have a clear, if provisional, path to expand without registering as brokers, and companies like Phantom, Crypto.com, and ProphetX have a template already running.

Further coverage of this guidance, including the underlying staff letter reported by Bloomberg Law, points to more detail on how the no-custody condition will be enforced in practice. What isn’t in question is that the CFTC moved first – and did so without waiting for Congress to act.

The post CFTC Draws a No-Custody Line for Trading Software appeared first on ReadWrite.

State Rep. Travis Weaver, R-Peoria, filed House Bill 5814 on Monday to repeal an Illinois tax on sports wagering and fantasy contests. The measure targets a levy Gov. J.B. Pritzker signed into law in June as part of a broader state revenue package.

What HB 5814 Would Do

The bill, filed as House Bill 5814, seeks to repeal the tax on sports wagering and fantasy contests. Weaver told The Center Square that he believes the tax could face a court challenge, citing his view that no other state has adopted a similar levy and questioning its legal basis.

Part of a Wider Repeal Push

The sports-wagering and fantasy-contest tax was included in a revenue package passed by the General Assembly last spring and signed by Pritzker in June. The package also included taxes on digital assets, prediction markets and digital advertising, along with a social media platform fee.

Weaver said the package created five new taxes that had not been tried in other states. He has separately filed House Bill 5806 to repeal the social media platform fee and House Bill 5807 to repeal the digital advertising tax.

Rep. John Cabello, R-Machesney Park, also filed House Bill 5798 to repeal the digital assets tax. The Center Square reported that Cabello filed that measure less than a week after Pritzker signed the revenue package into law in June.

The Cost-of-Litigation Argument

Weaver’s objections extend beyond the taxes themselves to the potential cost of defending them. He said lawsuits had already been filed against three of the revenue measures and argued that challenges to the separate taxes could require funding for the attorney general’s office to defend the state.

According to Weaver, the state was anticipating costs associated with the new taxes rather than revenue from them. He said litigation could cost taxpayers millions of dollars and maintained that Illinois residents are already burdened by new taxes. Those assessments reflect Weaver’s position on the revenue package and its potential legal consequences.

What’s Next

HB 5814 has been filed. The proposal is Weaver’s latest effort to repeal one of the taxes included in the revenue package Pritzker signed in June, alongside separate bills aimed at the social media platform fee, digital advertising tax and digital assets tax.

The Center Square report identified the filing of HB 5814 but did not provide a hearing date, floor-vote schedule or other timetable for the measure.

The post Weaver Targets Illinois Levy on Sports Wagering, Fantasy Contests appeared first on ReadWrite.

Lead

Robinhood’s futures and prediction-markets vice president and general manager, JB Mackenzie, said trading activity in prediction markets was rising ahead of the Federal Reserve’s rate decision. In comments reported by MarketScreener, citing MT Newswires, Mackenzie said interest in contracts tied to the Fed had grown substantially over the previous year.

The comments came as markets were pricing in roughly an 85% chance of a 25-basis-point hike, according to the report. Mackenzie discussed the activity with Romaine Bostick on Bloomberg’s The Close. He characterized Fed-related contracts as moving from relatively muted early adoption to one of Robinhood’s most popular contract categories.

The interview did not disclose specific trading-volume or revenue figures for contracts tied to the Fed. As a result, the reported popularity of those contracts should be read as Mackenzie’s description of activity within Robinhood’s broader event-contract offering rather than as a separate, quantified financial result.

Deal or Result Detail

Separate reporting has described substantial growth in Robinhood’s overall event-contract business. Crypto Briefing reported that the business grew roughly 15 times year over year in August. The same report said Robinhood generated $156 million in event-contract revenue during the second quarter of 2026 and that 13.6 billion event contracts traded during that quarter.

Those figures cover the event-contract segment as a whole, not Fed-related contracts specifically. They therefore provide context for the scale of Robinhood’s broader activity but do not establish what portion of revenue or trading volume came from macroeconomic contracts.

A widening product catalog

Robinhood’s event-contract offering has expanded from politically themed contracts into player-specific sports contracts and broader sporting-event outcomes, according to the supplementary reporting. That report also described an upcoming election hub, illustrating the range of categories associated with the company’s event-contract business.

In June 2026, Robinhood launched Rothera, described as a CFTC-licensed joint-venture exchange built for event contracts. The company also maintains partnerships with Kalshi and ForecastEx to route contracts, according to the same reporting. Together, those arrangements provide context for the infrastructure supporting Robinhood’s catalog.

Competitive pressure builds

The available reporting centers on Robinhood’s own event-contract expansion and does not provide comparable, verified figures for other companies. For Robinhood, Mackenzie’s comments put Fed-related contracts within a broader business that has reported rapid growth, while leaving the specific contribution of any individual rate-decision market undisclosed.

That distinction is important as attention turns to the Federal Reserve decision. The reported activity indicates growing interest in Fed-linked contracts on Robinhood, but the available evidence does not show whether that interest will persist after the decision or how it compares with trading in the company’s other event categories.

The post Fed Rate Bets Become a Robinhood Prediction-Market Favorite appeared first on ReadWrite.

The Ninth Circuit ruled 3-0 in favor of the Blue Lake Rancheria and Chicken Ranch Rancheria of Me-Wuk Indians on Wednesday, reversing a lower court’s denial of a preliminary injunction concerning Kalshi’s sports-event contracts on the tribes’ California lands. The case returns to the district court for further proceedings rather than ending in a final judgment, according to CDC Gaming.

The tribes sued Kalshi and Robinhood in 2025, arguing that sports prediction markets infringed their exclusive sovereign right to regulate gaming on their reservations. The Ninth Circuit panel found that Kalshi’s sports-event contracts constitute gaming under the Indian Gaming Regulatory Act and concluded that the tribes were likely to succeed on claims that Kalshi’s products on tribal lands violated IGRA and the tribes’ gaming ordinances.

Both tribes operate casinos under tribal-state gaming compacts with California, agreements that grant them exclusive rights to offer gaming within their territory. The appellate panel sent the case back to the district court, which must now weigh the remaining factors required to grant a preliminary injunction.

How the Lower Court Got Here

The district court had previously denied the tribes’ injunction request, accepting Kalshi’s position that its sports-event contracts function as federally regulated derivatives under the Commodity Exchange Act rather than as gambling products. That court also rejected the tribes’ Lanham Act claim, treating Kalshi’s advertising as a nonactionable opinion about the legality of its own products rather than a false or misleading statement.

The Picayune Rancheria of the Chukchansi Indians, originally part of the lawsuit, withdrew from the proceedings last August. That same month, the Ninth Circuit issued a separate ruling finding Kalshi subject to oversight by the Nevada Gaming Control Board.

Kalshi’s Rejected Argument

Kalshi’s defense rested on the claim that its contracts are federally regulated derivatives under the CEA and therefore fall outside tribal and state gaming law. The district court had accepted that framing when it denied the injunction.

Judge Margaret McKeown’s opinion for the panel rejected the argument that the Unlawful Internet Gambling Enforcement Act displaces IGRA, concluding that the federal gambling statute does not cover event contracts. The panel’s reasoning centered on the similarity between Kalshi’s contracts, which the company has called sports betting, and traditional sports wagers.

Reaction and What Comes Next

Scott Crowell, a tribal gaming attorney with Crowell Law Office Tribal Advocacy Group, described the ruling as a significant decision for tribes during the Indian Gaming Association’s New Normal webinar Wednesday. Gaming attorney Daniel Wallach told CDC Gaming that the decision provides a roadmap for other tribes across California and the country to challenge Kalshi’s business model. He said it could lead to more lawsuits and could result in Kalshi geofencing tribal reservations from its product.

The district court must now evaluate the remaining preliminary-injunction factors before any injunction takes effect. As of late Wednesday, Kalshi was considering whether to appeal the ruling.

The post Tribes Win Appeal, Sending Kalshi Case Back to Lower Court appeared first on ReadWrite.

The California Nations Indian Gaming Association urged Senate Majority Leader John Thune, R-South Dakota, and Minority Leader Chuck Schumer, D-New York, not to bring up the CLARITY Act on Tuesday unless the bill closes what the group calls a prediction-market loophole and preserves federal, state, and tribal gaming law. The request, made in a letter from CNIGA Chairman James Siva, lands days ahead of a scheduled Senate cloture vote, as tribal leaders nationally warn Congress that prediction markets are gambling by another name.

Siva’s letter argues that prediction-market operators are trying to use federal commodities law to offer nationwide gambling, sidestepping the framework Congress built through the Indian Gaming Regulatory Act and decades of tribal-state compacts. CNIGA wants any digital-asset market-structure bill to explicitly bar designated commodity markets from listing event contracts tied to sports wagering, athletic competitions, player performance, or casino-style gaming – anything already regulated under federal, state, or tribal gaming law. The coalition is also asking lawmakers to preserve IGRA and existing compacts outright, and to shut off any route by which digital-asset or decentralized-finance provisions could function as a backdoor for nationwide mobile gambling, a concern that echoes broader friction between federal prediction-market activity and state gaming authority.

“Congress built a carefully negotiated federal, state, and tribal framework for gaming,” Siva said. “Prediction market companies want none of that. But just because you’re well-funded doesn’t mean the rules don’t apply.”

A 630-Page Bill and a Tight Vote Count

The Senate has scheduled a cloture vote on the 630-page CLARITY Act for Tuesday, a procedural step that requires 60 votes to overcome a filibuster and move to formal floor debate. Republicans hold 53 seats, meaning the bill needs bipartisan support from Democrats or independents to clear that threshold.

The legislation, which would establish a new regulatory framework for cryptocurrencies and other digital assets, cleared the Senate Banking Committee in May but stalled as leaders struggled to lock down the votes needed for passage. Senator Cynthia Lummis, R-Wyoming, chair of the Senate Banking Electronic Assets Subcommittee, released a revised version of the bill Thursday. According to CNIGA, the biggest problem with that revision is what it doesn’t do: it expands the CFTC’s authority without drawing clear boundaries around tribal and state gaming law, an issue also raised by state gaming legislators pushing to keep prediction-market oversight at the state level.

Why Tribes Say the Stakes Go Beyond Wording

Siva was blunt about what he thinks is actually being sold: sports-event contracts are sports betting, he wrote, and calling them “prediction markets” or “event contracts” doesn’t change that in practice. He also drew a line between commercial gaming’s objections and the tribes’ stake in the outcome, describing tribal gaming as a core expression of self-governance and the funding source behind health care, education, housing, public safety, infrastructure, elder services, and cultural preservation programs.

Without that gaming revenue, Siva warned, many tribal nations would lack the resources to support their people and could once again become dependent on federal funds. That framing puts CNIGA’s ask squarely ahead of Tuesday’s cloture vote: proceed only if the bill closes the prediction-market loophole and locks in the gaming protections the letter demands, or don’t proceed at all.

The post Tribal Gaming Group Seeks Betting Safeguards in CLARITY Act appeared first on ReadWrite.

Lead

The Texas Senate State Affairs Committee heard testimony Tuesday on whether online prediction markets such as Kalshi should be treated as federally regulated financial exchanges or as gambling platforms subject to state oversight and restrictions. The hearing documented a continuing policy debate over how Texas might address the platforms and the limits that federal regulation could place on state action.

The committee heard from Kalshi, gambling-policy experts, and gaming-industry representatives. Kalshi describes itself as the first CFTC-regulated exchange dedicated to trading on the outcome of future events. The company offers contracts tied to elections, sports, weather, and pop culture, and says it charges a flat fee of about one cent per transaction.

Action Detail

Kalshi head of enforcement and legal counsel Robert DeNault told the committee that the platform offers Texans a regulated financial product for trading and managing financial risk. He compared prediction-market contracts with derivatives and argued that products can have similarities to insurance or sports-related risk management without being regulated as gambling.

DeNault also argued that an effort to prohibit a federally regulated platform could direct customers to offshore services without consumer protections or federal oversight. He said prediction markets could work with states on consumer-protection measures, including marketing, advertising, risk disclosures, and protections involving particular demographics, without creating preemption problems.

Critics Push Back on the Exchange Framing

Tres York of the American Gaming Association challenged the view that prediction markets should be treated as financial exchanges. York told the committee that 85 percent of Kalshi’s gambling volume is tied to sports and parlays, and he characterized a platform focused on sports betting as a sportsbook. He recommended that Texas pursue prediction-market operators in state court and cited rulings that he said had favored states in disputes over sports gambling offered through prediction markets.

Problem-gambling policy expert Brianne Doura-Schawohl cited a 2026 American Institute for Boys and Men survey finding that 61 percent of Americans view prediction markets as gambling rather than investing. She also pointed to research describing problem gambling as having the highest suicide rate among addictions and noted that Kalshi’s responsible-trading page links to the 988 Suicide and Crisis Lifeline.

Election Integrity and Youth Access Concerns

Jonathan Covey of Texas Values raised concerns about election integrity. He discussed the case of a former White House teleprompter operator who was fined $172,000 for using insider knowledge to place Kalshi bets on presidential speeches. Covey said Kalshi’s detection of the activity was favorable evidence for the company, while also showing that sensitive, non-public political information could be monetized on the platform.

Houston pediatrician Lindy McGee argued that the minimum age for these products should be 21. She warned that gambling addiction can affect families and contribute to financial instability and adverse outcomes for children. York also cited an estimate that young adults between 18 and 21 had wagered roughly $5.4 billion on Kalshi during the year.

Covey told lawmakers that the Legislature would need to consider how to regulate prediction markets without running into federal preemption. The next Texas legislative session is slated to begin January 12, according to the committee hearing.

The post Kalshi Hearing Tests Texas Authority Over Prediction Markets appeared first on ReadWrite.

The U.S. Senate rejected a procedural motion needed to advance the CLARITY Act on Tuesday, blocking legislation that tribal-gaming operators and lawmakers said was a crucial step toward stopping prediction-market companies from offering sports-event contracts outside state and tribal gaming systems. Senators voted 49-50 against cloture, falling well short of the 60 votes required.

The failed vote rejected a procedural step that limits debate on whether to take up the legislation at all. The CLARITY Act would establish rules for crypto markets and clarify the respective responsibilities of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Even if cloture had passed, the bill would still have needed to return to the House for consideration, and it is now likely dead for 2026, with no realistic path to reconciliation until after the November midterm elections.

Cortez Masto Cites Illegal Gambling Concerns

Senator Catherine Cortez Masto, D-Nevada, said the bill would allow prediction markets to continue operations she characterized as illegal gaming that ignores state and tribal law. She said the version under consideration marked a step backward from language passed out of the Senate Banking, Housing and Urban Affairs Committee and argued it undermined law enforcement’s ability to investigate crypto crimes, according to a statement following the vote. Senator Jacky Rosen, D-Nevada, joined Cortez Masto in voting no.

Supreme Court Petitions Loom Over the Fight

Cortez Masto’s objections come as Crypto.com and Robinhood have petitioned the U.S. Supreme Court to consider whether the Commodity Exchange Act preempts states from regulating sports-event contracts through their own gaming laws. That filing follows a Ninth Circuit ruling affirming a Nevada judge’s decision to dissolve an approved Kalshi injunction, allowing state gaming regulators to enforce state gambling laws against sports-event contracts. Whether the Supreme Court takes up either writ of certiorari remains unknown.

The Indian Gaming Association, tribal nations and partner organizations had lobbied Congress for months to reject any CLARITY Act version that failed to explicitly protect tribal sovereignty, the Indian Gaming Regulatory Act, tribal-state compacts, and the authority of tribal and state governments to regulate gaming within their jurisdictions – concerns detailed in tribal leaders’ warnings to Congress over prediction-market expansion.

DeFi Language Divided Operators

The revision at issue specified that the bill’s DeFi provisions apply only to spot and cash digital-commodity transactions, a distinction reportedly meant to reduce the risk that broad DeFi language would inadvertently rewrite regulations governing event contracts. Tribal and commercial operators and state gaming regulators opposed the revision regardless, arguing it left the door open for federally regulated platforms to sidestep existing oversight – a tension that has also shaped CFTC rulemaking fights over prediction markets.

David Bean, chairman of the Indian Gaming Association, called the Senate’s failure to advance H.R. 3633 a victory for tribal sovereignty but warned the fight against illegal prediction markets offering sports-event contracts continues. He said the association would keep pushing for federal legislation and regulatory action protecting IGRA and tribal-state compacts from preemption, preserving tribal authority to regulate gaming, and prohibiting federally regulated prediction markets from offering sports betting and casino-style gambling through event contracts or decentralized finance platforms.

What Comes Next

With reconciliation unlikely before the midterms, attention shifts to the Supreme Court’s undecided call on the Robinhood and Crypto.com petitions and to ongoing regulatory discussions, including recent industry conversations reflected in CFTC summit talks on prediction-market rules. Bean said any future legislation on digital assets or prediction markets must begin from a clear principle that tribal sovereignty is not negotiable.

The post Tribal Sovereignty Wins a Senate Pause on the CLARITY Act appeared first on ReadWrite.

Kalshi and Polymarket Global combined for $14.10 billion in contract volume during the Sept. 7-13 week that opened the NFL regular season, according to a DeFi Rate volume report. That was up 9.3% from $12.90 billion the previous week, with football, US Open tennis, esports playoffs and Federal Reserve positioning among the main drivers of activity.

Kalshi Widens Its Lead

Total trades across both platforms climbed 10.7% to 86.50 million. Kalshi generated $12.98 billion of the combined volume, up 9.4% week over week, giving it a 92.1% share, a record for the platform. Polymarket Global rose 7.6% to $1.11 billion, or 7.9% of the total, while Polymarket US logged $818.52 million across its five available daily reports.

Sports contracts were the largest source of retail trading activity during the week, with Kalshi and Polymarket Global combining for $3.76 billion. Kalshi accounted for $3.265 billion, while Polymarket Global’s sports volume jumped 104.7% to $498.81 million. On Kalshi, the New England-Seattle market generated $57.86 million. Other high-volume NFL markets included San Francisco-Los Angeles at $45.30 million and Washington-Philadelphia at $28.48 million.

A Sixth Straight Week of Growth

The Sept. 7-13 result capped a six-week period from Aug. 9 through Sept. 13 in which DeFi Rate reported five consecutive weeks of higher Kalshi volume. Weekly volume increased from $8.069 billion in the week ending Aug. 9 to $12.983 billion in the week ending Sept. 13, a 60.9% increase over the period. Kalshi’s September month-to-date volume through Sept. 13 reached $23.45 billion, 53.4% higher than the same period in August.

Away from football, Polymarket Global’s Fed Decision in September market generated $48.85 million, up 48.8% from $32.83 million the week before. Four League of Legends playoff matches on the same platform combined for more than $38.74 million in weekly volume.

Combos, Open Interest, and the Sportsbook Question

Kalshi’s multi-leg combo contracts, which allow traders to combine several predictions into one position, reached $1.93 billion in volume. That represented 99.4% of the combined $1.95 billion combo market between the two platforms. Open interest as of Sept. 13 stood at 677.18 million contracts on Kalshi, 321.34 million on Polymarket Global and 164.19 million on Polymarket US.

The week’s data also underscored the breadth of activity across sports, economic and esports markets. Kalshi held the larger share of combined volume, while Polymarket Global recorded gains in sports trading and activity around the upcoming Federal Reserve decision.

The post Kalshi Takes 92.1% Share as Weekly Contract Volume Hits $14.1B appeared first on ReadWrite.

Polymarket launched event contracts tied to private-company milestones this week, expanding into IPO timing, valuation targets and secondary-market activity for firms including OpenAI, Anthropic and Stripe. The move landed the same week the Securities and Exchange Commission said it would seek public input before clearing prediction-market ETFs for launch, a signal that the agency is taking more time rather than issuing an outright rejection.

The private-company contracts run through a new partnership with Nasdaq Private Market, which will supply the data used to resolve each contract. Early markets ask whether companies like OpenAI, Anthropic, Stripe, Databricks and Kraken will hit specific valuation thresholds by set dates, structured as simple yes-or-no outcomes rather than any claim on equity.

Polymarket and Nasdaq Private Market described the product as a way to widen access to price discovery in a corner of finance that has largely been reserved for venture firms, institutions and accredited investors. That expansion comes as Polymarket faces broader scrutiny over its banking relationships and regulatory footing as it pushes into new product lines.

SEC Weighs Novel ETF Structures

SEC Chair Paul Atkins said Wednesday the agency wants to gather public input on how it should handle prediction-market ETFs and other novel products, framing the review as a way to work through the implications transparently, according to Atkins. The proposed funds would wrap event contracts inside a traditional ETF structure, giving investors exposure without trading directly on a platform like Polymarket or Kalshi.

Issuers including Roundhill, Bitwise and GraniteShares have already filed products tied to elections, recessions, tech layoffs and oil prices. The broader debate over how financial regulators should treat event contracts now extends to whether those payoffs belong inside a mainstream investment wrapper at all.

States Keep Pushing Back

The CFTC and Justice Department sued Minnesota this week over a law the agency called the first outright state ban on prediction markets, filed less than a day after Governor Tim Walz signed it. The law takes effect Aug. 1, and the complaint argues Minnesota is trying to regulate derivatives markets that fall under the CFTC’s exclusive jurisdiction – a fight that echoes suits already filed against Arizona, Connecticut, Illinois and New York.

Polymarket also filed with the CFTC to list parlay-style sports contracts in the U.S., with a stated listing date no earlier than May 21, adding to the legal pressure already surrounding sports-related prediction contracts. A Senate Commerce Committee hearing the same week raised questions about whether such contracts could invite athlete cheating, expose minors to gambling-like products, or undercut state and tribal gaming systems.

The post Private Valuations Reach Polymarket via Nasdaq Private Market appeared first on ReadWrite.

The Ninth Circuit Court of Appeals ruled on August 28 that sports-related event contracts offered by prediction-market platforms are not swaps under federal commodities law, clearing the way for Nevada to apply its own gaming regulations to those products. The decision, detailed in ReadWrite’s earlier coverage of the case, denied requests for injunctive relief from Kalshi, Crypto.com, and Robinhood.

All three platforms had asked the court to stop the Nevada Gaming Control Board from shutting down their sports-outcome contract offerings in the state. The court’s finding, according to Insider Monkey’s report via Yahoo Finance, was that these contracts function as sports bets rather than federally regulated swaps, putting them squarely within reach of state gambling law.

The classification question sits at the center of a wider fight. Prediction-market operators and the CFTC have argued that event contracts, including sports-outcome products, qualify as swaps subject to exclusive federal jurisdiction, which would bar states from regulating or banning them outright. Forty-four states have pushed back, arguing the products are sports betting dressed up in derivatives language, a dispute tribal leaders have also raised with Congress.

Why the Timing Matters for Sportsbooks

Platforms like Kalshi have used the federal-swap designation to offer sports-outcome betting in states where traditional sportsbooks remain restricted or banned. That workaround has been a genuine competitive threat: DraftKings and Flutter have faced sustained valuation pressure over the past year, with analysts citing prediction markets’ rapid growth as a headwind, a trend also visible in recent NFL betting-growth data.

Shares of both companies jumped after the ruling. DraftKings gained as much as 10% and Flutter rose as much as 8% on August 28, per Insider Monkey’s figures. The move came despite institutional investors having already pulled back: DraftKings’ hedge fund ownership fell from 61 funds in the first quarter to 54 in the second, while Flutter’s dropped more sharply, from 57 to 37 over the same stretch.

A Bernstein research note cited by Intellectia.AI adds context to how unsettled the legal picture remains. The note points to a separate 2-1 Third Circuit ruling in Flaherty v. KalshiEX that treated sports event contracts as swaps, and says New Jersey has since asked the Supreme Court to review that decision – a filing that arrived five days after the Ninth Circuit’s contrary ruling. Bernstein’s analysts described the near-term outcome as more likely to be a regulatory patchwork than a clean, nationwide resolution.

What Comes Next

Kalshi filed a petition for rehearing on September 9, and a Supreme Court review remains possible, both developments Insider Monkey flags as the key markers for whether this ruling holds. The court’s opinion itself, filed in KalshiEX, LLC v. Assad, is available from the Ninth Circuit for anyone tracking the underlying legal reasoning.

None of this settles the jurisdictional question nationally. The ruling applies to one circuit’s reasoning on one set of Nevada-related claims, and prediction-market operators have both the incentive and the legal resources to keep contesting it. Insider Monkey’s own read is that a single-day stock rally proves little on its own – a sustained institutional bid in DraftKings and Flutter, rather than a one-time price pop, would be the stronger signal that the competitive landscape has actually shifted.

The post Nevada Gains Power to Regulate Sports Prediction Markets appeared first on ReadWrite.

Underdog Exchange DCM, Inc. and UDM, LLC, which does business as Underdog Predict, have taken regulators in Ohio, Massachusetts, and Wisconsin to federal court, after dropping Drafts in seven states this week. The company wants judges to stop both states from applying their gambling and sports betting laws to event contracts offered through its federally regulated market.

The cases, filed in federal courts in Ohio, Massachusetts, and Wisconsin, add Underdog to a widening legal fight over who gets to regulate prediction markets. Platforms argue these products fall under federal commodities law, while states increasingly view sports contracts as ordinary wagers that require local gambling licenses.

In Ohio, Underdog sued officials including Attorney General Andy Wilson and Ohio Casino Control Commission Interim Executive Director Andromeda Morrison. It says its status as a designated contract market and futures commission merchant places the contracts within the Commodity Futures Trading Commission’s authority under the Commodity Exchange Act.

Ohio has already taken an aggressive approach toward rival Kalshi. In April, the Casino Control Commission proposed a $5 million penalty for allegedly conducting unlicensed sports gaming. Kalshi has fought the state in federal court, although an Ohio judge previously declined to block enforcement while that litigation continued.

Underdog says that leaves it facing the same regulatory threat: “The threat of Defendants’ enforcement of Ohio law poses a direct and imminent threat to Underdog’s business and its users, and leaves Underdog with a ‘Hobson’s choice’… Either Underdog can continue to operate in Ohio, ‘expos[ing] [itself] to potentially huge liability’… or it can ‘suffer the injury of obeying [Ohio’s] law’ despite the fact that it is preempted.”

Prediction market regulation now hinges on a growing federal-state split for Underdog and other platforms

In Massachusetts, Underdog sued Attorney General Andrea Joy Campbell and Massachusetts Gaming Commission Executive Director Dean Serpa. The challenge arrives after Massachusetts secured a preliminary injunction restricting Kalshi’s sports-related event contracts.

Underdog argues state intervention conflicts with federal market rules and the Constitution’s Supremacy Clause. It also maintains that event derivatives can serve price discovery and hedging purposes instead of operating like conventional sportsbooks.

The legal picture is increasingly divided. In August, the Ninth Circuit ruled that Kalshi’s sports event contracts were sports bets rather than swaps, allowing Nevada to enforce its gambling laws. That decision conflicts with the Third Circuit’s earlier approach favoring Kalshi against New Jersey.

Wisconsin has become another front. Attorney General Josh Kaul brought enforcement actions involving Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase. Kaul stated: “Thinly disguising unlawful conduct doesn’t make it lawful. These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”

The CFTC later sued Wisconsin officials. CFTC Chairman Michael Selig issued a stern warning against state interference: “Our message to Wisconsin is the same as to New York, Arizona, and others: if you interfere with the operation of federal law in regulating financial markets, we will sue you.”

Wisconsin litigation also extends to tribal gaming. A federal judge allowed the Ho-Chunk Nation’s central claims against Kalshi to continue, finding the tribe had plausibly alleged that accessible sports contracts could constitute class III gaming on tribal land.

Against that unsettled backdrop, Underdog is asking both federal courts for permanent injunctions and declarations that federal commodities law preempts the states’ gaming restrictions.

Featured image: Underdog

The post Underdog sues Ohio, Massachusetts, and Wisconsin as prediction market fight deepens appeared first on ReadWrite.

Coinbase says Kalshi caused a mistaken prediction-market settlement tied to Michigan’s wild 13-12 win over Western Michigan. The crypto company plans to make affected winners whole while letting customers keep money they received because of the original error.

The dispute stems from a game that appeared finished before officials restored one second, giving Michigan another play and changing the result.

CNN correspondent Marshall Cohen reported Monday (September 7) that Coinbase customers were caught up in the problem. Screenshots reviewed by Cohen showed Coinbase apologizing for “an issue with the settlement” and saying it was “manually recalculating the balances for all affected accounts.”

Cohen later shared a Coinbase statement that pointed directly at Kalshi.

“An erroneous settlement by Kalshi led to certain positions being underpaid.”

Coinbase plans to credit affected customers with the full amount their winning positions should have paid. Customers who received money because of the earlier, incorrect result will also be allowed to keep it.

“Payouts already made under the original incorrect settlement will stand and will not be reversed or recovered,” the statement said.

That differs from Kalshi’s handling of the mistake, which involved reversing payouts issued when Western Michigan was initially treated as the winner.

Coinbase will pay rightful Michigan winners without clawing back mistaken payouts

No. 16 Michigan trailed Western Michigan 12-7 when quarterback Bryce Underwood launched what looked like the game’s final pass. The Hail Mary was incomplete, the clock showed zero and Western Michigan began celebrating an apparent upset.

After reviewing the play, officials concluded Western Michigan’s Micah Davis had touched the ball after jumping from out of bounds with one second remaining. The Big Ten later said Davis “started his jump from an established out-of-bounds position” before touching the ball.

Michigan received another snap, and Underwood found JJ Buchanan for a 47-yard Hail Mary touchdown that produced the 13-12 victory.

“One for the history books right here,” Michigan coach Kyle Whittingham said after the game.

The restored second remained controversial. ReadWrite reported that broadcast footage appeared to show zero on the clock before Davis made contact. Western Michigan asked for clarification but said it would not appeal.

Kalshi had already settled its “Western Michigan vs. Michigan” market by the time the review ended. We previously put trading volume at about $18.6 million. Kalshi initially paid positions based on a Western Michigan victory.

Cohen later reported that Kalshi admitted it had “wrongly and prematurely settled” the market. Kalshi reversed those payouts, reimbursed traders mistakenly treated as losers and paid positions matching Michigan’s official win.

“We corrected the result to a Michigan win, making sure all Kalshi customers got paid out correctly.”

ReadWrite also reported that a customer shared a Kalshi email saying the market had been settled “to the wrong outcome” before being “re-settled to the correct result.”

Coinbase is taking another route. Cohen said the company blamed Kalshi for the Michigan “prediction market snafu” but would “let the wrongful winners keep the payouts.”

Featured image: Canva

The post Coinbase blames Kalshi for Michigan market error and protects payouts customers appeared first on ReadWrite.