Kalshi recently faced a notable setback in its legal battle in Utah, while Coinbase encountered scrutiny from a Michigan judge. Novig has launched prediction markets across the nation and is now suing New York following its expansion. Additionally, Congress convened yet another hearing on these emerging markets.
In New York, the situation is heating up. Last week, Attorney General Letitia James filed a lawsuit against Kalshi, demanding $36 billion from the operator for running an alleged “illegal, unlicensed gambling operation.” New York has shown a strong stance against prediction markets, previously taking action against Coinbase and Gemini earlier this year in April.
Despite the legal challenges, the New York sports scene is embracing these very markets that the state is attempting to regulate. Polymarket made headlines this week after announcing a partnership with the New York Yankees, which involves signage at Yankee Stadium, branding during local broadcasts, and exclusive experiences for fans. Michael Tusiani, Senior Vice President of Partnerships for the Yankees, expressed enthusiasm about enhancing Polymarket's brand visibility.
Polymarket is not alone; it already partners with the NHL's New York Rangers and major leagues like the NHL and MLB. Simultaneously, Novig has joined forces with the New York Mets, indicating that sports franchises in this highly regulated betting market are increasingly accepting prediction markets that state authorities claim should not operate.
Amid this backdrop, the Commodity Futures Trading Commission (CFTC) issued a warning this week regarding the use of American-style odds by registered prediction market operators. The agency cautioned against marketing practices that could mislead participants, emphasizing the need to avoid terms such as -110 or +100 in favor of nominal or percentage terminology.
The CFTC stated, "Displaying pricing information for derivatives products in bookmaker-style odds is likely to mislead market participants about the nature of the transaction into which they are entering."
Concerns over consumer understanding were highlighted during a House hearing in April, where CFTC Chair Michael Selig was unable to distinguish between prediction market contracts and state-regulated sportsbook odds. Representative Gabe Vasquez (D-New Mexico) demonstrated this confusion with a comparison, ultimately articulating that the average consumer would struggle to tell them apart.
On another note, the Senate Committee on Indian Affairs discussed the CLARITY Act this week. Tribal gaming authorities and Ohio's Solicitor General echoed concerns that amendments to the act might inadvertently ban sports- and casino-related event contracts. It appears that any progress will be delayed, as reports indicate the Senate will postpone voting on the cryptocurrency bill until after the August recess. Senate Majority Leader John Thune confirmed that the bill would be prioritized in September, although it requires bipartisan support and has faced opposition from some Democrats calling for revisions to the commodities aspects overseen by the Senate Agriculture Committee.
In the financial sector, DraftKings and FanDuel both released their Q2 earnings recently, revealing contrasting perspectives on prediction markets. Flutter, the parent company of FanDuel, reported a challenging quarter, acknowledging slower-than-expected operational progress for FanDuel Predicts, with a revenue of $6 million and projected spending exceeding $200 million in that area for the year. Flutter is also shifting its sports contracts from joint venture partner CME Group to Crypto.com.
Conversely, DraftKings CEO Jason Robins expressed optimism on their earnings call, stating, "Predictions is already growing faster than we anticipated." He highlighted that over 600,000 customers engaged with their predictions product within the first six months of 2026, with annualized trading volume soaring from $2.3 billion to $11 billion, largely driven by their Combos prediction markets. Unlike Flutter, DraftKings did not adjust its full-year fiscal outlook.
Lastly, ProphetX, a relatively new player in the prediction markets arena, continues to innovate by forming strategic partnerships. Recently, they collaborated with Players’ Lounge, a skill-based gaming platform, to integrate ProphetX's sports event contracts in select regions. This week marked another milestone as ProphetX teamed up with EPICK Fantasy, a peer-to-peer daily fantasy sports platform, to launch major-league sports contracts. ProphetX Co-Founder Jake Benzaquen noted the collaboration’s significance in promoting competition among users, rather than against the house. EPICK Fantasy CEO Matt Downs emphasized that their audience naturally approaches gaming like traders, making the inclusion of prediction markets a fitting evolution. ProphetX, which rebranded last November and received CFTC approval in June, continues to make strides in the prediction markets field.
