In this photo illustration, an online prediction market site’s app is displayed on an electronic device on February 25, 2026 in Chicago, Illinois.
Scott Olson | Getty Images
States and the federal government may be fighting over who has the power to regulate prediction markets, but the companies building them are well on their way as platforms continue to experience significant growth.
The Commodity Futures Trading Commission and six U.S. states are in a lawsuit over jurisdiction to create regulations for event contracts. A total of 17 states are challenging companies with prediction markets, including Calci, Polymarket, Coinbase, and Robinhood, with one state moving to ban them entirely.
States have argued that they have the ability to regulate these platforms, arguing that the business of sports is tantamount to gambling. Sports event contracts account for the majority of trading volume in prediction markets. However, the CFTC argues that its right to regulate swaps and derivatives places all of these contracts under its jurisdiction.
Congress is also coming up with its own plans. House Oversight and Government Reform Committee Chairman James Comer told CNBC’s “Squawk Box” on Friday that he is seeking information from Calci and Polymarket’s CEO about the company’s efforts to regulate insider trading.
However, based on private company management comments and private company evaluations, legal uncertainty does not hinder confidence in investing in the growth of these platforms.
“There’s a lot of noise around prediction markets that set legal positions,” Flutter Entertainment CEO Jeremy Peter Jackson said on an earnings call earlier this month. Flutter owns FanDuel Predicts. “Until we finally understand and understand what the Supreme Court has to say, I think we’re going to live with this uncertainty.”
Jackson said that despite the legal issues, the company will continue to invest in market making with third-party prediction market platforms, a new strategy it unveiled in its last earnings call.
People walk in front of a banner outside the New York Stock Exchange (NYSE) for the IPO of Flutter Entertainment, FanDuel’s parent company, on January 29, 2024 in New York City.
Spencer Pratt | Getty Images
DraftKings CEO Jason Robbins said on an earnings call in May that the company views its investment in its prediction market platform as a long-term investment.
“Obviously, there’s always the possibility that something changes, regulatory or otherwise, but assuming the environment remains consistent with what we’re seeing now, we expect to continue investing in 2027.”
Nor do legal issues slow down the growth of private companies. With the recently announced funding round, the company’s valuation is now $22 billion, up from $11 billion in December, according to Carsi. Polymarket is reportedly valued at $15 billion, up from $9 billion in October.
CME Group CEO Terrence Duffy, who helped develop FanDuel Predicts, said on an earnings call last month that while the legal issues surround sports, other event contracts, such as economic, political and financial forecasting, have received less scrutiny. That’s why he thinks they’re growing. Bernstein predicts that sports contracts will only account for about 30% of deal volume by 2030.
Robinhood CEO Vlad Tenev said he disagrees with the state’s opinion but understands its frustration.
“I hope states don’t have concerns, but that would be… irrational, right?” he said on Robinhood’s April earnings call. “This is a jurisdictional dispute that will play out over the next few years.”
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
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