The prediction markets news cycle this week has been largely shaped by a series of legal battles. Last week saw Novig and Crypto.com filing lawsuits in Missouri, while Polymarket took Ohio to court, challenging the state’s sports betting regulations as discriminatory and unconstitutional. Additionally, Utah initiated legal action against Kalshi, its affiliates, and two trading firms associated with Susquehanna. In a related case, Michigan's attorney general accused Kalshi of breaching a preliminary injunction due to advertising activities within the state.
Beyond the courtroom drama, several noteworthy developments emerged. The Commodity Futures Trading Commission (CFTC) sent communications to Novig and ProphetX, instructing both registered exchanges to hold off on listing certain sports prediction markets. This directive followed the publication of the CFTC’s finalized proposed rule on sports event contracts, which is currently open for public comment. A spokesperson from the CFTC expressed concerns that these operators were planning to introduce “micro” event contracts, which may not align with the regulations laid out in the Commodity Exchange Act (CEA). These contracts potentially include bets on minor events, such as which player will score first in a basketball game. While both companies have self-certified these markets, they have not yet been listed. The CFTC has requested justification for why these offerings should be permissible under the CEA’s definition of a “swap.”
The CFTC emphasized, “Any derivatives contract offered by a CFTC-regulated exchange must be compliant with the Commodity Exchange Act. The CFTC’s rejection of ‘micro trades’ today reflects a broader commitment from Chairman Michael Selig and the CFTC to protect consumers from potential fraud or manipulation." The commission's proposed rule notes that some in-game prop bet-style markets may not meet public interest or CEA standards, echoing similar concerns at the state level. Recent restrictions enacted by the NBA also limit what types of player props and micro bets its sportsbook partners can offer.
In Ohio, the situation has intensified. Following the Polymarket lawsuit, the Ohio Casino Control Commission (OCCC) has been actively cracking down on unlicensed sports betting. Over the past 18 months, the OCCC has issued cease-and-desist letters and filed lawsuits against various entities, including a $5 million fine against Kalshi for alleged illegal sports betting operations. Just this week, the OCCC reinforced its position by warning all licensed sportsbooks that any involvement in sports event contract trading could jeopardize their licenses. The OCCC emphasized in its communication to licensees that associating with illegal operators raises suitability concerns, a critical factor in maintaining licensure.
In the UK, IG Group is preparing to launch a new prediction markets product after its $1.3 billion acquisition of Underdog earlier this year. The company indicated a strong market interest in prediction markets in the UK and plans to integrate predictions, cryptocurrency, and conventional trading into a single platform, expecting to include sports, politics, and entertainment categories by early 2027. IG Group recently applied for a betting license from the UK Gambling Commission.
In Canada, financial regulators have taken a more restrictive approach. The Canadian Investment Regulatory Organization (CIRO) has updated its guidelines to strictly prohibit the offering or promotion of sports and entertainment event contracts. This body currently oversees investment dealers and has only authorized two firms, Interactive Brokers Canada and Wealthsimple, to facilitate access to prediction markets.
Adding to the landscape of integrity monitoring, Integrity Compliance 360 (IC360) announced a new partnership with Novig, reinforcing a commitment to responsible trading. IC360 will provide tools to help identify and combat harassment in sports betting contexts. This partnership aligns with Novig’s values as it shifts its focus from sweepstakes gaming to sports prediction markets, insisting that all users must be at least 21 years old.
Lastly, High Roller Technologies celebrated the public launch of its ROLR prediction markets platform, aiming to create engaging and accessible prediction market experiences. After a beta test phase, High Roller has shifted focus towards event contracts under new leadership. The company, which already offers online casino services in select markets, registered ROLR with the National Futures Association and includes Crypto.com’s event contracts among its offerings.
In another development, iGaming supplier Hacksaw Gaming announced it would launch a B2B prediction markets platform, further illustrating the ongoing expansion within the prediction markets space across various segments of the gaming industry.
