This week highlighted significant developments in the prediction markets, including legal challenges and major corporate moves. The Commodity Futures Trading Commission (CFTC) filed a lawsuit in Kentucky, and Kalshi pursued similar action in Illinois. Additionally, DraftKings launched its own prediction markets exchange, marking a notable expansion in the sector.
One of the standout stories involves the Major League Baseball Players Association (MLBPA), which has requested a ban on player prop-style event contracts. According to ESPN reporters David Purdum and Jeff Passan, the MLBPA is advocating for stricter regulations regarding betting on individual player performances across state-regulated sportsbooks, daily fantasy platforms, and prediction markets governed by the CFTC. Interestingly, while pushing for this ban, the MLBPA has also sought permission for players to enter into endorsement deals with legal betting operators and prediction markets, indicating a desire to balance regulation with commercial opportunities.
In another twist, former Solicitor General Elizabeth Prelogar, who served under the Biden administration, is now advocating for prediction markets in the courts. Prelogar represents the Coalition for Prediction Markets, which includes Kalshi and Crypto.com. She recently submitted an amicus brief in the Sixth Circuit Court of Appeals, arguing that event contract trading should be federally regulated. This particular case consolidates two separate legal proceedings: Kalshi versus Ohio and Tennessee. Earlier rulings had mixed outcomes, with one judge siding with the Ohio authorities while another granted Kalshi relief against Tennessee.
Meanwhile, there have been some legislative movements regarding prediction markets. This week, the House Administration Committee voted 5-4 to advance the Stop Lawmakers From Predicting Act, which would prohibit members of Congress and their families from trading on political and government-related contracts. The bill received Republican support, with Democrats opposing it due to concerns that it does not go far enough in regulating political trading. Just months earlier, the Senate imposed internal rules barring senators and their staff from participating in any prediction markets.
In a notable corporate move, Meta, the company behind Facebook and Instagram, is reportedly developing an AI-driven prediction market app, which will initially allow free play. While the project is in its early stages and lacks a confirmed name, it follows the rise of platforms like Polymarket and Kalshi.
The Wall Street Journal also made waves with its investigation into Polymarket’s advertising tactics. The report uncovered that Polymarket had compensated content creators to produce videos suggesting misrepresented customer wins totaling $1.9 million. According to the investigation, many videos showcased fake trades on sites designed to resemble Polymarket, with actual statistics indicating a substantial loss for users portrayed as winning.
Lastly, Kalshi's CEO Tarek Mansour hinted at a possible Initial Public Offering, projecting that while it won't occur in 2026, next year could be feasible. Concurrently, the Financial Times reported that Kalshi is preparing for a funding round that might elevate its valuation to $40 billion, following a record trading month of $17.9 billion in May.
