Article By Anthony J. Constantini
The Superbowl’s coming up. A time for socialization, wings, and fun.
Unfortunately, thanks to prediction markets like Kalshi and Polymarket, it’s also going to be a time for gambling. In 2018, the Supreme Court ruled that Congress could not require states to ban sports betting. Since then, what was once confined to Vegas and select Indian reservations has become commonplace – and the last year, their operations have ratcheted up.
2025 saw Kalshi and other so-called “prediction markets” such as Polymarket transform America’s gambling landscape. By exploiting a loophole in federal law and lax enforcement by Congress and regulators, these platforms now offer nonstop sports betting to anyone with a smartphone, even in states that have explicitly banned the practice.
The scale of this shift is already enormous. In a single week Kalshi and Polymarket, driven by the NFL playoffs, landed almost $6 billion in contracts. In one week. And their rise hasn’t been confined to sports: Prediction markets have found their way into nearly every aspect of American cultural life. CNN announced that it will partner with Kalshi to include their markets in coverage, as has CNBC. And Golden Globes viewers were treated to constantly updated Polymarket odds before commercial breaks.
Yet most Americans remain unaware that these platforms are running entirely contrary to the rules that have long governed online gambling and were designed to protect consumers and preserve states’ authority to set their own standards.
Prediction markets are pulling off this sleight of hand by claiming they aren’t gambling sites at all. Instead, they argue they should be treated like federally regulated futures markets. Kalshi does not even deny it is offering sports betting in defiance of state law. It just asserts that because it is registered with the federal Commodity Futures Trading Commission, state law doesn’t matter.
This is galling, to say the least. In its own advertising, Kalshi openly markets itself as a betting app, boasting in advertisements that people can bet on the NFL in all 50 states with Kalshi. But rather than facilitating trades in wheat or oil – like actual futures markets – they host bets on practically everything but make most of their money from sporting events.
This isn’t to say states aren’t fighting back. A bevy of bipartisan state attorney generals have hauled Kalshi into court. Some have even been met with success. In Massachusetts, a federal judge ordered a preliminary injunction against Kalishi in January, forcing the company to stop taking sports betting in the commonwealth. In Nevada, a federal judge flatly denied Kalshi the ability to call itself a futures trader and ruled that Nevada has the authority to regulate the company’s activity, saying, “These are sports wagers and everyone who sees them knows it.” But these are only a handful of states, and even in those, the legal fight is still ongoing.
This fight is not an abstract jurisdictional dispute. By ignoring state law, Kalshi and its peers are causing real harm. Eighteen states have not legalized online sports betting due to a belief that the benefits – some tax revenue – do not outweigh thousands of their citizens becoming gambling addicts. And it’s not even clear if the tax revenue from gambling is even all that significant. In Texas, for example, the Texas Public Policy Foundation found that legalized sports betting would a “paltry” 0.31 percent of Texas’ education funding, but that 4.5 million adult Texans would experience negative consequences from gambling, with more than 640,000 suffering severe harm.
And the states which did choose to legalize gambling? They certainly assumed they would be able to regulate it, imposing age limits and enforcing consumer protection standards on licensed operators.
But online prediction markets have made regulations impossible. In states that banned sports betting, they make it available anyway. In states that legalized it, they dodge the taxes, safeguards, and regulations that lawmakers deemed essential. Across all 50 states, they deliver the downsides of round-the-clock online gambling without any of the benefits.
For unclear reasons, Congress has just watched this unfold – even though there’s an incredibly easy fix. Legislators could simply clarify that sports bets do not qualify as futures contracts regulated by the CFTC. That single change would force prediction markets to obtain state licenses, follow state rules, and pay state taxes if they want to continue operating.
If Congress does not act now, countless millions may be ensnared by something sold to them as futures trading. This wouldn’t be a ban on prediction markets. It would simply force them to take off the Scooby Doo-esque futures costume and reveal themselves as what they are: gambling venues. America’s a free country. If your vice isn’t hurting someone else, you can engage in it. But like other vices – such as smoking, pornography, and alcohol – gambling is tightly regulated for a reason: It sucks people in and destroys their lives. Online prediction markets are no different. It’s time America made that clear.
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