Over the past 12 months, numerous efforts have been made to regulate the activity of prediction market operators on various levels, including from state, federal and Tribal entities. Many state regulators began such efforts by either issuing cease-and-desist orders or warning licensed operators of becoming involved in the trading of event contracts, only to see early results fall short of expectation.
Regulators struggled to contend with the desire operators had to expand the sports betting industry to heights previously unimaginable, including the ability to take wagers on contracts involving politics, culture, finance and even death. Having to see bets taken on whether certain political leaders would “still be in power” by a certain date seemingly drove regulators to alter their strategy with prediction markets.
Believing the Commodity Futures Trading Commission (CFTC) to be unequipped in regulating prediction market operators, state and federal bodies began taking a more strike-first mentality in court.
Was Nevada able to turn the tide on prediction markets?
In late January 2026, the first sign of how states would begin changing course against prediction market operators stemmed from the Nevada Gaming Control Board (NGCB) filing a civil enforcement action against Polymarket in Carson City District Court. Within its complaint, the Nevada regulator asked the court for a declaration and injunction which would prohibit Polymarket from offering “unlicensed wagering” in violation of state law.
From there, the regulator would go on to also file enforcement action against both Kalshi and Coinbase, resulting in temporary restraining orders being issued to all three prediction market operators by March 2026.
Fellow state regulators in Washington and Massachusetts also chose to bring prediction market entities to court first, in lieu of letting operators set a legal precedent in the fight against event contract trading.
US Gaming & Sports Attorney Daniel Wallach highlighted the change in strategy by states, commenting on how regulators are “finally recalibrating their enforcement approach” by “eschewing counterproductive (cease & desist letters) in favor of striking first in court.”
Still, the rise of prediction markets has continued in the US, exemplified by a $22bn valuation of Kalshi during late March. For Super Bowl LX in February, Kalshi reported its football-related markets processed over $865.2m in trading volume, producing nearly half of the $1.76bn projected to be wagered on legal sportsbooks by the American Gaming Association (AGA).
Even with Nevada and other US states managing to secure victories against prediction market operators by taking the offensive, organizations such as the AGA have started to approach event contract trading in a somewhat wittier manner.
April Fools? Regulators believe prediction market threats are ‘no joke’
On April 1, the AGA released an update on the trading of sporting event contracts, believing operators utilize the offering to “evade state regulations and ignore the voice of voters and elected leaders.”
Beginning its social media post by stating “we wish this were an April Fool’s joke,” it appears the AGA might also be changing its marketing strategy with prediction markets by taking a more light-hearted angle while states go to battle in court.
When you pull the curtain back here, it's just going to be a bunch of people counting money, it's a cash grab
Whether the new strategy brings more supporters to the AGA’s side remains to be seen, but it can’t hurt attempting to come off as a gentle hero rather than a potential villain trying to ruin the party.
In an effort to continue its April Fool’s theme, the AGA stated prediction market operators “try to pretend they’re not enabling sports wagering, but they’re not fooling anyone.”
Will the new plan of action see US residents view prediction market operators as the villain of this story? Perhaps… but it’s still more likely this battle finds resolution in court, rather than through light-hearted social media posts which use holidays to its advantage.
Tribal organizations take action against prediction markets
Coinciding with the Indian Gaming Association (IGA) Tradeshow & Convention in San Diego, over 25 Native American Tribes and 10 Tribal associations filed an amicus brief in support of Arizona’s response to Kalshi’s preliminary injunction motion. Kalshi filed a lawsuit against Arizona regulators on March 13, citing a “substantial risk” of enforcement action while naming figures such as Arizona Department of Gaming Director Jackie Johnson and Attorney General Kristin Mayes.
In response, Mayes filed criminal charges and a 20-count misdemeanor against Kalshi, alleging the operator ran an illegal gambling business across the state and unlawfully accepted wagers on elections. Tribal organizations such as IGA, the National Tribal Gaming Commissioners & Regulators (NTGCR) and California Nations Indian Gaming Association (CNIGA) all signed the amicus brief, believing Kalshi is “siphoning away vital Tribal and state governmental revenue to its owners’ pockets.”
During the San Diego convention, IGA Chairman David Bean held a press conference to address the threat of prediction markets, describing the offering as “illegal gambling dressed up as finance.”
“When speaking with (federal lawmakers), they say 'we're in a tough position because we are choosing between friends.' Our respectful pushback to that was this isn't a choice between friends, this is a choice between following the law or ignoring the law,” Bean said.
“When you pull the curtain back here, it's just going to be a bunch of people counting money, it's a cash grab. We do not want to wait for what started out as a brushfire, but is now a wildfire, to remain unchecked.”
In a social media post to seemingly address the amicus brief, Kalshi Board Member Brian Quintenz stated: “You can dislike the law, but Kalshi and other regulated entities are following it. Illegal, ‘offshore’ exchanges are another matter, however.
“Beyond that, I’d always rather be on the side of markets than thug casinos.”
At the end of the day, regulators winning the battle against prediction market operators will only bring US lawmakers closer to accepting the new vertical as a chance to generate additional revenue from betting. Whether that be through taxes or revenue sharing with Tribes is up to those currently in the trenches, whereas US residents continue to wait for a clearer path to form around prediction markets.
Kalshi and Polymarket introduced new safety guidelines on March 23, seeking to prevent insider trading efforts on prediction markets, including those conducted by politicians, athletes and ‘other relevant people’
