Full Breakdown
Tensions Rise Between Prediction Markets and Traditional Gambling Operators in the U.S.
10/16/2025, 1:54:57 PM
Nevada Regulators Issue Warnings on Prediction Markets
In October 2025, the Nevada Gaming Control Board (NGCB) issued a warning to licensees regarding the legality of prediction markets, stating that contracts related to sports events, elections, and pop culture are considered "wagering activity" under state law. This follows similar warnings from regulators in Ohio and Michigan. The NGCB emphasized that offering such contracts requires a nonrestricted gaming license with sports pool approval in Nevada. NGCB member George Assad criticized prediction markets, equating them to sports wagers and asserting that they fall under the jurisdiction of the Nevada Gaming Commission.
Legal Battles and Regulatory Responses
The NGCB's warning comes amid ongoing legal disputes involving prediction market platforms like Kalshi and Crypto.com. Kalshi has been embroiled in litigation since it received a cease-and-desist order from Nevada earlier in 2025. The platform successfully obtained a preliminary injunction allowing it to continue operations while the case is under appeal. Conversely, Crypto.com faced a setback when its injunction request was denied by Judge Andrew Gordon, who ruled that contracts based on sporting event outcomes do not qualify as "swaps" under federal law.
Industry Pushback and Concerns
The rise of prediction markets has sparked significant concern among traditional gambling operators. The American Gaming Association (AGA) has voiced strong opposition, with CEO Bill Miller labeling these platforms as "greedy" and "irresponsible." He warned that they threaten consumer protections and the integrity of regulated gambling. The Nevada Resort Association, representing major casino operators, has also expressed alarm, arguing that prediction markets operate without the same regulatory oversight as traditional sportsbooks.
The Growth of Prediction Markets
Despite regulatory challenges, prediction markets are gaining traction. Kalshi reported a trading volume of $1.3 billion in September 2025, capturing approximately 62% of the global market share. Polymarket, another key player, saw its monthly active traders rise to 450,000 by January 2025. Analysts attribute this growth to a blend of social media engagement and financial speculation, suggesting that these platforms are transforming public sentiment into measurable financial activity.
Future Developments and Market Dynamics
As the legal landscape evolves, major sportsbooks are exploring entry into the prediction market space. FanDuel, in partnership with the Chicago Mercantile Exchange (CME) Group, plans to launch a prediction market platform focusing on economic indicators by the end of 2025. However, the company has refrained from offering sports contracts due to ongoing legal uncertainties. Meanwhile, DraftKings and Underdog are also eyeing opportunities in this emerging sector.
Conflicting Reports and Regulatory Gaps
The ongoing legal disputes highlight a significant regulatory gap, as prediction markets operate under the Commodity Futures Trading Commission (CFTC) rather than state gambling authorities. This has led to confusion regarding the classification of these platforms and their compliance with existing gambling laws. The Pennsylvania Gaming Control Board has urged Congress to clarify the definition of prediction markets, emphasizing the need for equitable regulation across the gambling landscape.
Conclusion: A Regulatory Crossroads
The rapid growth of prediction markets poses a challenge to traditional gambling operators and regulators alike. As these platforms continue to blur the lines between betting and financial trading, the need for clear regulatory frameworks becomes increasingly urgent. Without decisive action, the legal gambling sector may find itself overshadowed by a new frontier of digital predicting, raising questions about consumer protection, tax revenue, and the future of regulated gambling in the United States.
