The legal fight over prediction markets is far from over. Even if operators like Kalshi and Polymarket prevail in the ongoing battle with state regulators over whether sports-related contracts constitute gambling, lawyers warn that the industry’s next legal challenges may already be taking shape.
In a recent CasinoBeats analysis, CM Law Partner Linda Goldstein explained to Gaming Journalist Tim Alper that a victory over state gaming regulators would not end the industry’s regulatory exposure. “They simply shift.”
Among the issues likely to draw increasing scrutiny:
- Market manipulation and insider trading: As prediction-market activity grows, regulators are likely to focus more closely on whether participants are trading on nonpublic information or manipulating markets.
- Influencer marketing: Prediction-market operators face growing questions about whether paid influencers are adequately disclosing their relationships with platforms, potentially drawing attention from the FTC and state attorneys general.
- CFTC rulemaking: Federal rules could ultimately determine which types of event contracts prediction markets can offer, including contracts involving sports officiating and player injuries.
- Political and regulatory uncertainty: A change in administration could bring a change in the CFTC’s approach, while Congressional pressure for additional regulation continues to build.
- Compliance and consumer protections: Operators may need to get ahead of regulatory requirements through stronger monitoring, KYC procedures, responsible-gaming measures and safeguards to prevent minors from accessing platforms.
Linda also points to opportunities for the industry to be proactive, including developing formal information-sharing agreements with sports leagues and other organizations, and using technology to strengthen age verification and access controls.
The bigger takeaway for prediction-market operators? Winning a legal battle over jurisdiction is not the same thing as winning the regulatory war. As the industry expands, operators that engage with regulators, anticipate evolving requirements, and build compliance into their business models may be better positioned for whatever comes next.
If you have questions about what’s at stake, please connect directly with Linda at lgoldstein@cm.law.
CM Law (cm.law) – formerly Culhane Meadows – is the largest national, full-service, women-owned & managed (WBE) law firm in the United States. Designed to provide experienced attorneys with an optimal way to practice sophisticated law while maintaining a superior work/life balance, the firm offers fully remote work options, a transparent, merit and math-based compensation structure, and a collaborative culture. Serving a diverse clientele—from individuals and small businesses to over 40 Fortune-ranked companies—CM Law is committed to delivering exceptional legal services across a broad spectrum of industries.
The foregoing content is for informational purposes only and should not be relied upon as legal advice. Federal, state, and local laws can change rapidly and, therefore, this content may become obsolete or outdated. Please consult with an attorney of your choice to ensure you obtain the most current and accurate counsel about your particular situation.
