Tracking Every Prediction Market Lawsuit Involving Kalshi, Polymarket & Other Operators

Prediction markets like Kalshi and Polymarket have exploded in popularity, processing billions in weekly volume on sports, politics, and current events. But behind the surge is an unprecedented legal war: more than 30 active court cases that we can find, spanning federal preemption battles, state enforcement actions, tribal gaming disputes, consumer class action suits, and even claims under a 300-year-old British gambling statute.

The central question in nearly every case is whether prediction markets are federally regulated financial instruments or unlicensed gambling.

This tracker covers approximately 30 lawsuits we can find involving prediction markets like Kalshi, Coinbase, Robinhood and Polymarket as of Feb. 27, 2026, with case statuses, upcoming court dates, and analysis of what the outcomes mean for users of those platforms.

This tracker is updated regularly as new filings, hearings, and rulings occur. We try to catch everything, but reach out to spetrella@bettercollective.com if there's anything we missed. Last updated: February 27, 2026.

Key Takeaways

The core legal question: Does the federal Commodity Exchange Act (CEA) preempt state gambling laws when it comes to event contracts traded on Commodity Futures Trading Commission (CFTC) regulated exchanges? If yes, platforms like Kalshi and Polymarket can operate nationwide, in all 50 states, under one set of federal rules. If no, they need individual state gambling licenses — and could be banned in states that haven't legalized sports betting.

The scorecard is mixed. Kalshi has won early injunctions in New Jersey, California, and Tennessee, where a federal judge on Feb. 19 ruled that sports event contracts qualify as "swaps" under federal law. But Kalshi has lost in Maryland, Nevada, and Massachusetts. In Massachusetts, a state Appeals Court granted Kalshi an emergency stay on Feb. 18, putting the geofencing order on hold while the appeal proceeds. Legal analysts have noted that courts siding with Kalshi (NJ, TN) have focused narrowly on whether contracts are "swaps," while courts siding with states (MA, MD) have focused on broader "congressional intent."

The case count keeps growing. As of late February 2026, there are roughly 20 federal lawsuits involving Kalshi alone, plus a growing number of Polymarket, Coinbase and Robinhood-related suits, and consumer class actions. The total is north of 30 active cases — some estimates put it closer to 50. Kalshi preemptively sued Utah on Feb. 23, its seventh state-level federal lawsuit. New class actions have been filed in Oregon and Florida.

Sports are the battleground. About 90% of Kalshi's trading volume comes from sports-related event contracts. Kalshi said it processed more than $1 billion in volume on the Super Bowl alone, and lifetime sports volume has reached $16.8 billion — more than double Nevada's entire 2025 sports betting handle of $8 billion. State gaming regulators see these as unlicensed sports bets, not financial derivatives, like the platforms argue.

Insider trading concerns are real. On Feb. 25, Kalshi disclosed its first public enforcement actions: a MrBeast video editor was fined ~$20,000 for trading on non-public information, and a political candidate was banned for betting on his own race. Kalshi says it has opened 200 insider trading investigations in the past year. The CFTC issued an enforcement advisory the same day, asserting its authority to police illegal trading on prediction markets.

The political backdrop matters. The Trump administration's CFTC has been favorable to prediction markets, dropping the original appeal against Kalshi and filing amicus briefs in multiple cases defending federal jurisdiction. CFTC Chair Michael Selig wrote in a Wall Street Journal op-ed that the agency will "no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction." But state regulators, tribal governments, and state attorneys general are pushing back hard. Donald Trump Jr. is a strategic advisor to Kalshi and Polymarket.

Upcoming Court Dates

These are the hearings and deadlines that will shape prediction market legality in the coming months. We'll update this section as dates are confirmed.

Federal Preemption Scorecard

The central legal issue in virtually every case is whether federal law preempts state gambling regulation of prediction markets. Here's how courts have ruled so far at the preliminary injunction stage:

Running tally: Kalshi has won preliminary rulings in D.C., New Jersey, California, and Tennessee. Connecticut remains unresolved (enforcement paused pending a ruling). They've lost in Maryland, Nevada (they won initially, then a judge reversed it in November), Massachusetts, and Nevada (Polymarket). The split makes appellate outcomes — especially the 9th Circuit in April and 4th Circuit in May — enormously consequential.

On Feb. 18, the CFTC filed its first-ever amicus brief in a prediction market case, backing Crypto.com in its 9th Circuit appeal against Nevada. This is the first time the federal government has formally intervened on behalf of prediction markets in state-level litigation.

Kalshi vs. CFTC: The Original Case

Everything starts here. In 2023, the CFTC rejected Kalshi's proposal to offer "Congressional Control Contracts" — event contracts that let users bet on which party would control Congress. The CFTC argued these constituted illegal "gaming."

Kalshi sued and in September 2024, a D.C. District Court judge ruled in Kalshi's favor, finding that election contracts are not "gaming" under the CEA. The CFTC sought a stay pending appeal, but the D.C. Circuit denied it. Kalshi launched election betting for the 2024 cycle.

After Trump took office, the CFTC dropped its appeal entirely in May 2025. The D.C. ruling stands as the industry's foundational legal victory — one that former CFTC officials have called the prediction market industry's "rocket booster."

Case: KalshiEX LLC v. CFTC, No. 24-5205 (D.C. Cir.)
Status: Resolved. Kalshi won. CFTC dropped the appeal.

This ruling gave Kalshi the legal confidence to expand aggressively into sports contracts in early 2025 — which triggered everything that followed.

Kalshi vs. State Regulators

After Kalshi began offering sports event contracts in January 2025, state gaming regulators responded with cease-and-desist letters. Kalshi went on offense, suing regulators in federal court and arguing that the CEA grants the CFTC exclusive jurisdiction. Here's where each case stands.

Nevada

Case: KalshiEX v. Hendrick, No. 2:25-cv-00575 (D. Nev.) → 9th Circuit (25-7516)
Judge: Andrew P. Gordon (Obama appointee)

Nevada was the first and most closely watched battleground. The Nevada Gaming Control Board issued a cease-and-desist in March 2025. Kalshi sued and won a preliminary injunction in April 2025, with a judge finding that the CEA preempts state gaming laws.

But the tide turned. Gordon allowed the Nevada Resort Association — representing the state's casino industry — to intervene. In November 2025, he reversed himself and dissolved the injunction, writing that Kalshi's interpretation of the CEA would "upset decades of federalism regarding gaming regulation."

Kalshi appealed to the 9th Circuit. On Feb. 18, 2026, the 9th Circuit denied Kalshi's emergency motion for an administrative stay. Within hours, the Nevada Gaming Control Board filed a new civil enforcement action against Kalshi in Carson City District Court, seeking a TRO and permanent injunction. The complaint accuses Kalshi of unlicensed wagering, serving users under 21, and lacking safeguards against insider trading and match-fixing. Kalshi immediately removed the case to federal court, arguing exclusive CFTC jurisdiction.

The 9th Circuit oral arguments for Kalshi, Robinhood, and Crypto.com are still scheduled for April 16, 2026, and the CFTC has now filed an amicus brief in support of prediction markets in Crypto.com's related appeal — the first time the federal government has formally backed prediction markets in court.

New Jersey

Case: KalshiEX v. Flaherty, No. 1:25-cv-02152 (D.N.J.) → 3rd Circuit (25-1922)
Judge: Edward S. Kiel (Biden appointee)

Judge Kiel granted Kalshi's preliminary injunction in April 2025, agreeing that federal law preempts state gaming enforcement. New Jersey appealed to the 3rd Circuit. Oral arguments were held on September 10, 2025. A decision is pending.

Notably, 34 state attorneys general filed an amicus brief in support of New Jersey, signaling broad bipartisan state-level opposition to Kalshi's preemption argument.

Maryland

Case: KalshiEX v. Martin (D. Md.) → 4th Circuit
Judge: Adam B. Abelson

Maryland was the first federal court to side with state regulators. Judge Abelson denied Kalshi's preliminary injunction in August 2025, finding that the CEA does not displace state authority over gambling. He wrote that Kalshi could theoretically comply with both federal and state regimes, undermining the preemption argument.

Kalshi appealed to the 4th Circuit. Neal Katyal, the former acting Solicitor General, is representing Kalshi. Oral arguments are tentatively scheduled for May 5–8, 2026. Maryland has agreed not to enforce its ban during the appeal.

Ohio, New York, Connecticut, Tennessee, Utah

Kalshi has also filed federal preemption suits against regulators in:

• Ohio Casino Control Commission — Pending in N.D. Ohio.
• New York State Gaming Commission — Filed Oct 2025 after NYSGC issued a C&D. New York agreed not to enforce while the court rules. Judge denied request for oral arguments.
• Connecticut DCP — Filed Dec 2025. Judge paused enforcement against Kalshi. Oral arguments held Feb 11, 2026. Awaiting ruling.
• Tennessee — Filed Jan 2026. On Feb. 19, Judge Aleta Trauger granted Kalshi a preliminary injunction, ruling that sports event contracts qualify as "swaps" under the CEA. This is the first federal court to explicitly classify sports contracts as swaps — a finding Nevada's Judge Gordon rejected. $500,000 bond required.
• Utah — Filed Feb. 23, 2026 preemptively against Governor Spencer Cox and AG Derek Brown, citing their public statements threatening enforcement. Utah lawmakers are also advancing HB243, which would classify proposition-style wagers as illegal gambling.

States & Tribes Suing Kalshi

While most state-vs-Kalshi cases were initiated by Kalshi suing regulators, a few states and tribal governments have gone on offense.

Massachusetts Attorney General v. Kalshi

Case: Commonwealth v. KalshiEX (Suffolk County Superior Court)
Judge: Christopher K. Barry-Smith

Massachusetts AG Andrea Campbell filed suit in September 2025, the first state to proactively sue a prediction market. Kalshi tried to remove the case to federal court, but the court remanded it back to state court, finding Kalshi hadn't shown "clear Congressional intent" to displace state gambling regulation.

In January 2026, Judge Barry-Smith granted a preliminary injunction barring Kalshi from offering sports contracts in Massachusetts. On February 6, he denied Kalshi's emergency stay, giving the company 30 days (until March 8) to implement geofencing.

On Feb. 18, a Massachusetts Appeals Court granted Kalshi an emergency stay, putting the geofencing order on hold while Kalshi's appeal proceeds. This means Kalshi can continue operating in Massachusetts for now.

This case is significant because it's the first state court loss for Kalshi — and being in state court means Kalshi can't immediately appeal to a federal circuit court.

Nevada Gaming Control Board v. Kalshi (New — Feb. 18, 2026)

Case: NGCB v. KalshiEX (Carson City District Court → removed to D. Nev.)

This is a new state enforcement action, separate from Kalshi's original federal lawsuit against Nevada. The NGCB filed this suit in state court on Feb. 18 — within hours of the 9th Circuit denying Kalshi's emergency stay — seeking a TRO and permanent injunction. The complaint alleges Kalshi operates unlicensed wagering in Nevada, serves users under 21, and lacks safeguards against insider manipulation and match-fixing.

Kalshi immediately removed the case to federal court, arguing CFTC exclusive jurisdiction. Nevada will likely seek to remand back to state court. Kalshi is also reportedly trying to steer the case away from Judge Gordon, who ruled against them previously.

Nevada filed an emergency motion to remand. A joint hearing on remand motions for both the Kalshi and Polymarket Nevada enforcement cases was held Feb. 24 before Judge Miranda Du. Kalshi argued "complete preemption" while Polymarket invoked the Federal Officer Removal Statute, arguing it acts on behalf of the CFTC when enforcing its rules. Judge Du said she would issue a decision by late February or early the following week. If the cases are remanded to state court, Kalshi would likely face a TRO that could force it to exit Nevada.

California Tribes v. Kalshi & Robinhood

Case: Blue Lake Rancheria et al. v. Kalshi, No. 1:25-cv-06162 (N.D. Cal.) → 9th Circuit
Judge: Jacqueline Scott Corley

Three California tribes (Blue Lake Rancheria, Picayune Rancheria, Chicken Ranch Rancheria) sued in July 2025, arguing Kalshi's sports contracts violate the Indian Gaming Regulatory Act (IGRA) and divert revenue from tribal casinos.

Judge Corley denied the tribes' preliminary injunction in November 2025, finding that IGRA doesn't apply to third-party platforms like Kalshi and that the UIGEA (Unlawful Internet Gambling Enforcement Act) explicitly exempts CFTC-regulated exchanges. She wrote that Kalshi's contracts are "not bets or wagers" under UIGEA.

The tribes have appealed to the 9th Circuit.

Ho-Chunk Nation v. Kalshi & Robinhood (Wisconsin)

Case: Ho-Chunk Nation v. Kalshi (W.D. Wis.)

The Ho-Chunk Nation sued in August 2025, alleging Kalshi violates IGRA and racketeering laws. Kalshi moved to dismiss, arguing the tribe lacks standing to sue a non-tribal third party under IGRA. The tribe filed for a temporary injunction in December 2025. Trial deadlines are scheduled through 2027.

Kalshi Class Action Lawsuits

A wave of consumer class actions has opened a new front, alleging Kalshi operates as an illegal, unlicensed sportsbook and misled users about how the platform works.

New York Class Actions (Consolidating)

Three separate class action lawsuits were filed in the Southern District of New York:

• Yee v. Kalshi — Filed Oct 2025. Nationwide class action. The first class action against any prediction market.
• Pelayo v. Kalshi (No. 1:25-cv-09913) — Filed Nov 2025. Represented by Lieff Cabraser Heimann & Bernstein, a powerhouse class action firm.
• Hallman v. KalshiEX (No. 1:26-cv-00317) — Filed Jan 2026.

All three are being consolidated before a single judge. A consolidated complaint is due March 24, 2026.

The core allegations across these suits: Kalshi markets itself as a peer-to-peer exchange, but in reality, its affiliated trading arm (Kalshi Trading LLC) acts as a market maker on the platform — meaning users are often betting "against the house" rather than against other traders. Plaintiffs argue this makes Kalshi indistinguishable from a traditional sportsbook.

Other Kalshi Class Actions

• Josephson v. Kalshi (N.D. Ill., No. 1:26-cv-00220) — Filed Jan 8, 2026. Illinois residents alleging illegal gambling. Kalshi has moved to transfer to New York.
• Alabama class action v. Kalshi — Filed Jan 29, 2026.
• Oregon class action v. Kalshi — Filed Feb 20, 2026. Alleges Kalshi operates an "illegal online gambling enterprise" in violation of Oregon law, which bans all non-state-run gambling. Plaintiffs seek double damages under the state's loss recovery statute.

Statute of Anne Cases

Perhaps the most unusual category of lawsuits involves a legal mechanism dating back to 1710.

The Statute of Anne is an 18th-century British gambling law that many U.S. states adopted and still have on the books. It allows a person who loses money in an illegal gambling transaction to sue the winner — or the gambling operator — to recover those losses, plus fees.

A Florida-based litigation funder called Veridis Management LLC, led by CEO Maximillian Amster, is behind entities that have filed Statute of Anne claims against Kalshi in six states:

• Ohio — Jennings v. Kalshi. Kalshi removed to federal court (N.D. Ohio). Plaintiff moving to remand.
• Kentucky — Filed in Franklin County. Removed to E.D. Ky. Plaintiff moving to remand.
• Illinois — Filed in Cook County. Removed to N.D. Ill. Plaintiff moving to remand.
• Massachusetts — Hearing held Dec 3, 2025.
• South Carolina — Plaintiff moving to remand to state court.
• Georgia — Judge denied plaintiff's motion to remand on Feb 3, 2026, keeping the case in federal court.

Separately, Illinois attorney Mark Lavery has filed his own qui tam claims against both Kalshi and Coinbase under Illinois law. A status conference is set for February 27, 2026.

These cases represent a novel approach: using litigation finance to fund hundreds of individual recovery claims, effectively weaponizing an arcane statute against prediction markets at scale.

Polymarket: CFTC Settlement & FBI Investigation

Polymarket's legal history is different from Kalshi's. The crypto-native prediction market started in 2020 and ran afoul of regulators almost immediately, and still hasn't fully launched to U.S. users. So it's not in the legal crosshairs in 2026 quite the same way Kalshi is.

2022 CFTC Settlement

In January 2022, the CFTC ordered Polymarket (operated by Blockratize Inc.) to cease and desist and pay a $1.4 million penalty for operating an unregistered facility for event-based binary options — essentially, swaps that were not traded on a registered exchange. Polymarket agreed to wind down noncompliant markets and blocked U.S. users.

2024 FBI Raid & DOJ Investigation

On November 13, 2024 — just days after Polymarket's markets correctly predicted Trump's election win — the FBI raided CEO Shayne Coplan's Manhattan apartment and seized his phone. The investigation focused on whether Polymarket violated its 2022 settlement by allowing U.S.-based users to access the platform via VPNs.

Polymarket called the raid "obvious political retribution." No charges were filed.

In July 2025, both the DOJ and CFTC formally closed their investigations without bringing new charges. This cleared the path for Polymarket's U.S. return.

U.S. Relaunch

Polymarket acquired CFTC-licensed derivatives exchange QCEX for $112 million in July 2025, received amended CFTC approval in November 2025, and relaunched in the U.S. on December 2, 2025, to limited users.

Polymarket Lawsuits

Since relaunching in the U.S. in December 2025, Polymarket has been hit with state enforcement actions and consumer lawsuits at a rapid clip.

Nevada Enforcement Action

Case: NGCB v. Blockratize (Carson City District → D. Nev., No. 3:26-cv-00089)

The Nevada Gaming Control Board filed a civil enforcement action against Polymarket in January 2026 — the first litigation brought against Polymarket since its U.S. relaunch. A state court judge granted a temporary restraining order on January 29, blocking Polymarket from offering event contracts in Nevada. Polymarket removed the case to federal court. A preliminary injunction hearing was held February 11; the ruling is pending.

Polymarket v. Massachusetts

Case: QCX LLC v. Campbell, No. 1:26-cv-10651 (D. Mass.)

On February 9, 2026 — hours after a Massachusetts judge denied Kalshi's emergency stay — Polymarket preemptively sued the Massachusetts Attorney General in federal court. Polymarket argues the state can't enforce gambling laws against a CFTC-regulated exchange and seeks declaratory and injunctive relief before Massachusetts can file its own suit.

Consumer Class Actions

• Miro San Diego v. Blockratize (S.D.N.Y.) — Filed Feb 4, 2026. Nationwide class action alleging Polymarket is an unlicensed sports betting platform. Plaintiff lost $5,000+ on the platform.
• Yoon v. Polymarket (S.D.N.Y.) — Filed Feb 12, 2026. California resident alleges Polymarket's advertising deceived him into believing sports betting was legal in California.
• Additional NY class action — Filed Feb 11, 2026.

Related Prediction Market Cases

Kalshi and Polymarket aren't the only platforms in court. As prediction markets go mainstream, distribution partners and competitors are getting dragged into the fight.

Robinhood

Robinhood launched a Prediction Market Hub through a partnership with Kalshi in 2025. It filed its own lawsuit against the Nevada Gaming Control Board in August 2025 (D. Nev., No. 2:25-cv-01541). Judge Gordon denied Robinhood's TRO in November. The appeal is consolidated with Kalshi's at the 9th Circuit (oral args April 16, 2026).

In Massachusetts, a judge initially dismissed the state's case against Robinhood but agreed to reconsider after Robinhood contracted with a second designated contract market (ForecastEx).

Coinbase

Coinbase entered prediction markets in December 2025 through a Kalshi partnership and immediately went on offense, suing regulators in three states:

• Connecticut — Oral arguments held Feb 11, 2026.
• Michigan — Oral arguments expected Feb/Mar 2026.
• Illinois — Oral arguments scheduled Feb 24, 2026.

Nevada's Gaming Control Board then sued Coinbase in state court in February 2026. Coinbase countersued in federal court.

Crypto.com

Crypto.com (operating as North American Derivatives Exchange) sued Nevada in June 2025. Judge Gordon denied its PI in October 2025. Crypto.com agreed to stop offering sports contracts in Nevada while appealing to the 9th Circuit. Its appeal will be heard alongside Kalshi's and Robinhood's on April 16.

On Feb. 18, the CFTC filed an amicus brief in the 9th Circuit specifically in support of Crypto.com's appeal — its first-ever intervention in a prediction market case. The brief argues that state gambling regulators cannot "invade" the CFTC's "exclusive jurisdiction" by "re-characterizing swaps trading on DCMs as illegal gambling."

A separate consumer class action was filed against Crypto.com in Florida on Feb. 13, 2026.

Sleeper Markets

Sleeper Markets LLC sued the CFTC itself, accusing the agency of intentionally delaying its application to register as a DCM, which would allow it to offer sports event contracts.

CFTC Enters the Fight (Feb. 18, 2026)

In the biggest development since the original D.C. ruling, the CFTC has formally entered the legal fight on the side of prediction markets.

On Feb. 18, the agency filed an amicus brief in the 9th Circuit in Crypto.com's appeal against Nevada — its first-ever intervention in a state-vs-prediction-market case. The brief argues that state gambling laws are preempted by the CFTC's exclusive jurisdiction over designated contract markets. The CFTC has since filed amicus briefs in several additional cases.

CFTC Chair Michael Selig previewed the move in a Wall Street Journal op-ed on Feb. 17, writing: "The CFTC will no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction over these markets." In a video statement, Selig added: "To those who seek to challenge our authority in this space, let me be clear, we will see you in court."

The CFTC also withdrew its 2024 proposed rule that would have restricted certain event contracts as "contrary to the public interest" (including those tied to gaming, war, and terrorism), and pulled a 2025 staff advisory that had cautioned exchanges about sports-related contracts. Both moves reflect a complete reversal from the agency's prior posture under former Chair Rostin Behnam.

On Feb. 25, the CFTC's Division of Enforcement issued a separate advisory after Kalshi disclosed two insider trading enforcement actions. Kalshi suspended and fined a MrBeast video editor (~$20,000) who traded on non-public information about upcoming video content, and banned a political candidate for five years for betting on his own race. Kalshi says it has opened 200 insider trading investigations in the past year, 12 of which are still ongoing. The CFTC emphasized it has "full authority to police illegal trading practices occurring on any DCM."

The amicus brief drew sharp criticism. California Governor Gavin Newsom's press office publicly questioned the CFTC's motives, posting a screenshot linking Selig's stance to Donald Trump Jr.'s advisory roles at Kalshi and Polymarket. Utah Governor Spencer Cox said prediction markets are gambling and vowed to fight them in court. Democratic Senators Catherine Cortez Masto and Adam Schiff urged the CFTC not to intervene.

The Coalition for Prediction Markets — which includes Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog — launched a seven-figure advocacy campaign in January that included a full-page Washington Post ad. Polymarket is not part of the coalition. Kalshi also opened a D.C. lobbying office and hired a former Biden administration official to lead federal outreach.

Cease-and-Desist Actions & State Warnings

Beyond active lawsuits, numerous states have taken regulatory action that hasn't yet produced litigation.

Cease-and-Desist Letters to Prediction Markets

• Nevada Gaming Control Board — March 2025 (Kalshi); January 2026 (Polymarket)
• Illinois Gaming Board — April 2025 (Kalshi); January 2026 (Polymarket)
• Montana Gambling Control Division — March 2025
• Arizona Gaming Department — May 2025
• Tennessee Sports Wagering Council — January 2026 (Polymarket, Kalshi, Crypto.com)
• Connecticut DCP — December 2025 (Polymarket, Kalshi, Robinhood, Crypto.com)

States Warning Licensed Operators

Several state gaming boards have threatened to revoke licenses from sportsbooks and gaming operators that partner with prediction markets:

• Ohio Casino Control Commission (Aug 2025)
• Arizona Gaming Department (Sep 2025) — Moved to revoke Underdog's fantasy sports license in Dec 2025
• Michigan Gaming Control Board (Oct 2025)
• Nevada Gaming Control Board (Oct & Nov 2025) — FanDuel surrendered its NV license; DraftKings pulled applications
• Illinois Gaming Board (Oct 2025)
• Massachusetts Gaming Commission (Nov 2025)
• Maryland Lottery & Gaming Commission (Nov 2025)
• Louisiana Gaming Control Board (Dec 2025)

Other State Actions

• Washington State Gambling Commission declared prediction markets "illegal" in the state
• Arkansas Attorney General issued an opinion that Kalshi constitutes illegal gambling
• New York AG Letitia James issued a consumer alert warning about prediction markets (Feb 3, 2026)
• Pennsylvania Gaming Control Board sent letters to the CFTC and Congress expressing concerns
• Utah Governor Spencer Cox publicly stated he would fight prediction markets in court (Feb 17, 2026). Kalshi sued Utah preemptively on Feb 23.
• Rep. Dina Titus (NV) introduced the Fair Markets and Sports Integrity Act (HB 7477) on Feb 11, 2026, to amend the CEA to prohibit sports event contracts
• Democratic Senators Cortez Masto and Schiff urged the CFTC not to intervene on behalf of prediction markets (Feb 13, 2026)

What This Means for Bettors

If you're using Kalshi or Polymarket to bet on sports, here's what the legal landscape means for you right now.

Can I still use Kalshi and Polymarket? Yes. Both platforms continue to operate in most states. A Massachusetts Appeals Court granted Kalshi an emergency stay on Feb. 18, keeping it operational there during the appeal. Kalshi won a preliminary injunction in Tennessee on Feb. 19. Polymarket is temporarily blocked in Nevada. In Nevada, a remand decision on Kalshi's enforcement case is pending — if remanded to state court, a TRO could follow. Kalshi preemptively sued Utah on Feb. 23 to block enforcement there.

What if my state bans prediction markets? If a court orders geofencing in your state, you would lose access to trading — depending on the state it could be just sports, or could be everything. Non-sports markets (politics, economics, culture) are generally not targeted by state gaming regulators, though Nevada's action against Polymarket covered all event contracts.

Is my money safe? Both Kalshi and Polymarket are CFTC-regulated designated contract markets. Customer funds are held in segregated accounts with clearing requirements. This is a higher level of fund protection than most offshore sportsbooks offer. However, the class action lawsuits allege that users betting against platform-affiliated market makers may not realize they're effectively betting against the house. On Feb. 25, Kalshi disclosed it has opened 200 insider trading investigations in the past year and made its first public enforcement actions against two users who traded on non-public information.

Could prediction markets be banned nationwide? It's unlikely in the near term given the Trump administration's active support for the industry — the CFTC filed its first amicus brief defending prediction markets on Feb. 18. But if Congress amends the CEA — like Rep. Titus's proposed bill — or the Supreme Court rules against federal preemption, the industry would face a fundamentally different regulatory landscape.

Legal Explainer: The Core Issues

What is Federal Preemption?

Federal preemption is the constitutional principle that when federal and state laws conflict, federal law wins. Kalshi and Polymarket argue that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over transactions on designated contract markets, and that state gambling laws simply cannot apply to their federally regulated exchanges. States counter that Congress never intended to strip them of their traditional authority to regulate gambling.

What is the Commodity Exchange Act?

The CEA is the federal law governing futures and derivatives markets. It was updated in the 2010 Dodd-Frank Act, but nobody at the time foresaw prediction market apps. The law prohibits "gaming" as a type of event contract, but doesn't define the term — which is exactly what courts are now fighting over.

Are Prediction Markets Gambling?

This is the fundamental question. Kalshi says its event contracts are financial derivatives that allow risk management — analogous to hedging strategies used in commodities markets. State regulators say that when 90% of your volume is people betting on NFL games, you're a sportsbook with extra steps.

Courts have come down on both sides. The D.C. court said politics is not "gaming." Maryland and Massachusetts say sports contracts are indistinguishable from sports bets.

What is the Statute of Anne?

An 18th-century British law — formally the "Gaming Act of 1710" — that allowed losers in illegal gambling to sue winners and recover their losses. Many U.S. states adopted versions of this statute that remain on the books. A litigation funder is now using these laws to file claims against Kalshi in six states, arguing that since Kalshi's contracts are illegal gambling, losing bettors can recover their money.

Could This Go to the Supreme Court?

Almost certainly. Federal district courts are already split on the preemption question. Once circuit courts issue conflicting rulings — likely after the 3rd, 4th, and 9th Circuits decide their pending cases — the Supreme Court would have the classic "circuit split" that typically warrants review. Legal experts estimate this could reach SCOTUS within 2–3 years.

Timeline of Key Events

• Jan 2022 — CFTC orders Polymarket to cease and desist, $1.4M fine. Polymarket blocks U.S. users.
• Sep 2023 — CFTC rejects Kalshi's congressional control contracts. Kalshi sues the CFTC.
• Sep 2024 — D.C. District Court rules for Kalshi: election contracts ≠ "gaming."
• Oct 2024 — D.C. Circuit denies CFTC stay. Kalshi launches election markets for the 2024 cycle.
• Nov 2024 — FBI raids Polymarket CEO's home. Trump wins election; Polymarket markets proved accurate.
• Jan 2025 — Kalshi begins offering sports event contracts.
• Mar 2025 — Nevada issues its first state C&D against Kalshi. Kalshi sues NV, NJ, MD.
• Apr 2025 — Kalshi wins preliminary injunctions in Nevada and New Jersey.
• May 2025 — CFTC drops appeal of D.C. election ruling under new administration.
• Jul 2025 — DOJ/CFTC close investigations into Polymarket. Polymarket acquires QCEX for $112M.
• Aug 2025 — Maryland denies Kalshi's PI. California tribes and Ho-Chunk Nation sue Kalshi.
• Sep 2025 — Massachusetts AG sues Kalshi. 3rd Circuit hears NJ appeal.
• Oct 2025 — NV judge denies Crypto.com PI. Kalshi sues New York. First Statute of Anne suits filed. FanDuel surrenders NV license.
• Nov 2025 — NV judge dissolves Kalshi's injunction. California judge denies tribes' PI. First class actions filed against Kalshi in NY. Polymarket receives CFTC approval.
• Dec 2025 — Polymarket relaunches in U.S. Kalshi sues Connecticut. Coinbase sues CT, MI, IL.
• Jan 2026 — MA court grants PI against Kalshi. NV court grants TRO against Polymarket. CFTC Chair Selig signals agency will defend federal jurisdiction. More class actions filed.
• Feb 2026 — MA denies Kalshi's emergency stay. Polymarket sues MA. Class actions filed against Polymarket. NV announces civil enforcement against Kalshi. Rep. Titus introduces HB 7477. CFTC files first-ever amicus brief backing prediction markets (Feb 18). 9th Circuit denies Kalshi's emergency stay; Nevada sues Kalshi in state court same day. MA Appeals Court grants Kalshi emergency stay (Feb 18). Tennessee federal judge grants Kalshi PI, ruling sports contracts are "swaps" (Feb 19). Oregon class action filed against Kalshi (Feb 20). Kalshi preemptively sues Utah (Feb 23). Nevada remand hearing held for Kalshi and Polymarket cases (Feb 24). Kalshi discloses first insider trading enforcement actions; CFTC issues enforcement advisory (Feb 25).

Prediction Market Lawsuit FAQ

How many lawsuits are there against Kalshi?

As of late February 2026, Kalshi is involved in approximately 20+ federal and state lawsuits plus additional state court cases. These include seven cases where Kalshi sued state regulators (NV, NJ, MD, OH, NY, CT, TN, UT), eight-plus cases where state commissions and tribes sued Kalshi (including Nevada's Feb. 18 enforcement action), and six consumer class actions (in NY, IL, AL, OR). There are also seven Statute of Anne recovery claims in six states.

How many lawsuits are there against Polymarket?

Polymarket faces at least five active legal matters: the Nevada enforcement action, its preemptive suit against Massachusetts, and three consumer class actions in New York. This is in addition to its resolved 2022 CFTC settlement and the closed 2024 FBI/DOJ investigation.

Is Kalshi legal in my state?

Kalshi operates as a CFTC-regulated designated contract market, which it argues makes it legal nationwide. The CFTC has filed amicus briefs supporting that view. However, courts in Maryland, Massachusetts, and Nevada have disagreed, and numerous other states have issued cease-and-desist letters. A Tennessee federal judge sided with Kalshi on Feb. 19, ruling its contracts are "swaps." Kalshi received an emergency stay in Massachusetts on Feb. 18. Nevada's remand decision is pending — if remanded to state court, Kalshi could be blocked there. Kalshi preemptively sued Utah on Feb. 23.

Is Polymarket legal in my state?

Polymarket is CFTC-regulated as of November 2025 and operates in all 50 states. However, it has been temporarily blocked in Nevada via a court order and faces potential enforcement in Massachusetts. The legal status is evolving rapidly.

What is the biggest prediction market lawsuit?

The most consequential case is likely Kalshi v. Nevada at the 9th Circuit (oral args April 16, 2026), because the 9th Circuit covers California — the largest state market — and a ruling there would carry significant persuasive authority. The CFTC's amicus brief makes this hearing even more significant. The 4th Circuit Maryland case (May 2026) is equally important for creating the circuit split that could push this to the Supreme Court. The Tennessee ruling (Feb. 19) deepened the district court split, with legal experts noting that "reasonable minds are going to differ on these questions, which is why we're probably heading to SCOTUS."

When could the Supreme Court hear a prediction market case?

Legal experts estimate 2–3 years. The 3rd, 4th, and 9th Circuits all have pending appeals. If they issue conflicting rulings on the preemption question, SCOTUS would likely grant certiorari. A petition could arrive as early as late 2026 or 2027.