Everything you need to know about prediction markets in the US

Definitions

Designated Contract Market (DCM) - To operate as an exchange and sell futures whether that's in crude oil, foreign currencies or NFL prop bets, a company must either be or have access to a DCM. DCM status is granted directly by the CFTC.

Futures Commission Merchant (FCM) - Being granted this secondary status of Futures Merchant Commissioner allows an entity to act as an intermediary between the buyer of a futures contract and the DCM, like a broker.

What we're seeing now, as momentum builds, is betting operators falling over themselves to gain access to a DCM.

Who's in the game?

The US Commodities Futures Trading Commission (CFTC) has been assigning DCM status to exchanges since 1936, with many no longer active.

Here is a list of relevant DCMs and FCMs. Clearly pre-war wheat exchanges are not involved in the current debates. But they are relevant. The fact that futures contracts are so enshrined in the merchant history of the US, and the all-important Commodity Exchange Act of 1936, is precisely the reason why the legal arguments in favor of prediction markets are proving a puzzle for opponents.

DCMs:

Regulated Sports Book Index Exchange (RSBIX) (Pending) - RSBIX, in partnership with sports betting exchange Matchbook, has a pending application with the CFTC. The company holds the explicit intention of becoming "the most trusted sports event trading platform in the United States."

Aristotle Exchange (Approved: 09/05/2025) - Before PredictIt was licensed, it had been operating for over a decade already. The CFTC had agreed not to come after it as long certain conditions were met, one of which was that the platform's primary use must remain educational. Now fully licensed, PredictIt will no longer be bound to this.

QCEX (Approved: 07/09/2025) - This derivatives clearing organisation was acquired by Polymarket earlier this year, empowering Polymarket to legally re-enter the US after its 2022 ban. This hasn't happened just yet, but signs are it's just around the corner.

Railbird Exchange (Approved: 06/13/2025) - Shortly after Railbird acquired that CFTC approval, rumors surfaced that DraftKings was in talks to acquire the exchange. As yet, DraftKings has stayed out of the equation, but CEO Jason Robins has discussed potential activity.

Quanta Exchange (Approved: 05/30/2025) - This exchange appears not to have started trading as yet. It did not respond to a request for comment. One to watch perhaps.

ForecastEx (Approved: 06/24/2024) - This Chicago-based exchange offers contracts, or what it calls 'forecasts' on various economic, business, environmental, legislative or social events. The exchange is owned by Interactive Brokers, the founder of which, Thomas Peterffy, attempted (unsuccessfully) to acquire Kalshi in 2021.

Coinbase Derivatives (Approved: 11/23/2020) - Crypto-based exchange offering CFTC regulated oil and gold futures contracts. It has laid out plans however, to become "an exchange for everything." CEO Brian Armstrong claimed Prediction Markets could be an alternative to the New York Times.

Kalshi (Approved: 11/03/2020) - Tarek Mansour's prediction market sells event contracts across political, cultural and sporting events. In September its trading volume surpassed Polymarket's at $2.9bn.

ICE Futures (Approved: 06/10/2004) - ICE owns the New York Stock Exchange. It offers futures on many traditional investment opportunities around the world, including crude oil, interest rates, equity, gas, power, coal and soft commodities. In October 2025, it invested $2bn into Polymarket, raising the valuation of the platform after investment to $9bn. This move also made Polymarket the official partner of X.

North American Derivatives Exchange (NADEX) (Approved: 02/18/2004) - A pioneer of selling event futures as far back as 2009, the company was acquired by Crypto.com in 2022. In January, NADEX was investigated by the CFTC after offering sports related contracts.

The CME Group (Approved: 12/21/2000) - This group operates two DCMs, the Chicago Board of Trade and the Chicago Mercantile Exchange. After partnering with Flutter this year, the pair are expected to launch a predictions product later this year.

FCMs:

Robinhood - Robinhood has partnerships with Kalshi and ForecastEx allowing it to host prediction contract sales through its platform.

PrizePicks - PrizePicks became the first fantasy sports operator to be registered as an FCM and has registered its trading name as PrizePicks Predict.

Flutter and CME Group - The CME Group had its own FCM approved last year and, in partnership with Flutter, this will become Flutter's prediction market platform. The CME Group picked up plenty of competitor backlash when it first applied for an FCM. Some question the integrity and fairness of an exchange that is able to compete with its own members.

Others:

Underdog - The fantasy sports and wagering platform partnered with Crypto.com at the start of September to host prediction contracts. It has managed to sort this without being a registered FCM by offering direct access to the exchange in the capacity of a tech-provider. Whether this is legitimate or not is maybe low down on the CFTC's list of problems right now, but competitors won't be happy, and this question could rear up later down the line. Underdog is also reported to be using Kalshi, in the same manner as any other user, to offset the risk of its own offerings and wagers. Will this hedging become more common and legitimize the practice further?

Active legal arguments

Presumption against pre-emption - Kalshi lawyers have made clear they believe federal law pre-empts state law, and therefore state gambling regulators have no authority over prediction markets. Maryland is absolutely vital, because it was the one state that originally went against the grain of other district courts, and denied Kalshi's request for a preliminary injunction against the state regulator. In the argument for this denial, the US judicial doctrine "presumption against pre-emption" was invoked. This means that when interpreting the law, those who make judgements should presume that federal law did not intend to impede on states' sovereignty where it is not explicit in the law. Kalshi are appealing, but this circuit split is the kind of thing that can arouse the attention of the Supreme Court.

Event vs Outcome - While Maryland was the first court to break the pattern of backing Prediction Markets, Nevada is fascinating for seeming to have changed its mind. While Judge Gordon previously approved Kalshi's preliminary injunction request against the Nevada Gaming Control Board, he has now denied Crypto.com's. He is now questioning whether Kalshi's sporting event contracts can be considered swaps, based on the definition of 'event' vs 'outcome.' An event can be treated as a swap and therefore regulated by the CFTC. However, he believes that Kalshi's sports contracts are about 'outcomes,' falling into the realm of gambling. The sporting event itself may be an event, but conceptual information about who won and who scored etc, is an outcome, Gordon argues. This could be a decisive argument, whoever wins it.

Active legal proceedings

Arizona - Arizona has served Crypto.com, Kalshi and Robinhood with cease-and-desists, but no further action has been taken as yet.

Illinois - Same situation as in Arizona with all three of those operators served.

Maryland - Maryland became the first state to refuse Kalshi's request for a preliminary injunction against its state regulator, the Maryland Lottery and Gaming Control Commission. Kalshi is appealing vociferously, and enforcement is for now delayed. The same situation is playing out with Crypto.com.

Massachusetts - Massachusetts opted to skip the cease-and-desist phase of proceedings and skipped to a legal case, charging Kalshi with illegal sports gambling.

Montana - Montana ordered Kalshi to cease trading back in April and said it would not be taking immediate enforcement action but hoped for 'voluntary compliance.' Kalshi is still available in the state and every other.

Nevada - Nevada began as a win for Kalshi with Judge Gordon granting the preliminary injunction preventing the Nevada Gaming Control Board enforcing its cease and desist. But the Judge's new opinion regarding Crypto.com could shape the debate going forward. The NGCB has already put forward a new motion to the courts imploring them to dissolve the Kalshi injunction.

New Jersey - New Jersey's cease-and-desist was met with another request for a preliminary injunction by Kalshi, which was granted. The Judge here seems to think that the 'swaps' definition is broad enough for sports bets.

Ohio - Ohio is the most recent state to be sued by Kalshi over an authority dispute.

New York - An interesting class action case was brought against Kalshi in New York recently, seeking restitution for all losses by all users of Kalshi on the grounds that their promotional campaigns with messages like "Sports betting is now legal in all 50 states" are misleading and intentionally trick users into breaking the law.

Financials

Trading volume - Kalshi's trading volume has exploded in recent weeks. After a long period of dominance, Polymarket has fallen into second place, with Kalshi regularly capturing more than 60% of the market share. Polymarket's imminent US re-entry could shake that up, but then again, Kalshi's upcoming global strategy might do the same.

Valuation - When Kalshi announced it would be going live to 140 countries, it shared results of a new funding round that saw it hit a $5bn valuation. $300m has been raised from a large group of investors including Sequoia Capital, Paradigm and interestingly, fellow DCM, Coinbase. Polymarket still bests Kalshi in pure enterprise value, having received a $2m investment from the Intercontinental Exchange. This money means Polymarket will be worth $9bn post transaction.

For predictions to usurp sports betting in the US, the increasing financial success of the industry will have to be matched by success across the courtrooms of America.