- State Pushback Intensifies: Nevada and New Jersey have issued cease and desist letters to Kalshi and Robinhood, essentially arguing that its event contracts are akin to unlicensed gambling operations. Ohio and Illinois have followed suit, also adding Crypto.com to the mix.
- Kalshi Files Suit: The prediction markets platform filed federal lawsuits against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement. The suits contend that Kalshi is operating within federally granted rights and that the states are overstepping their boundaries.
- Interest Booms For March Madness: Nearly $250 million worth of contracts were traded during the first two rounds of March Madness on Kalshi, largely via its Robinhood partnership. A few short months ago, Kalshi facilitated $4 million in contracts during the Super Bowl.
🛑 States with cease and desist orders
⚠️ Summary of key filings and disputes
Predictions betting sites have rapidly surged in popularity. They offer exchange-traded markets where users can buy and sell shares on the outcome of a future event, such as the winner of a sporting event or a political election.
Sports betting is legal in at least some form in 38 states plus Washington, D.C. Prediction sites are available across the US. As interest in prediction markets has soared, legality questions have amplified, with several states taking action.
| State | Action | Details | Status |
|---|---|---|---|
| New Jersey | Cease and Desist | The New Jersey Department of Gaming Enforcement has issued cease and desist letters to both Kalshi and Robinhood, alleging that the platforms are offering unauthorized sports wagering in the state. | Robinhood pulled its prediction markets from NJ following the letter. Kalshi filed suit against NJ regulators in an attempt to block the enforcement actions. |
| Nevada | Cease and Desist | The Nevada Gaming Control Board sent a cease and desist letter to Kalshi , pointing to its offering of event-based contracts as being in violation of state law. | Kalshi has filed suit in the United States District Court for the District of Nevada, asking for a temporary restraining order. |
| Ohio | Cease and Desist | The Ohio Casino Control Commission issued cease and desist notices to Kalshi, Robinhood, and Crypto.com. | The OCCC has determined that event contracts on sporting events meet the definition of sports gaming, which requires licensing under state law. The platforms have until April 14 to comply with the order. |
| Illinois | Cease and Desist | The Illinois Gaming Board has issued cease and desist notices to Kalshi, Robinhood, and Crypto.com. | The letters state that the operators are “engaging in unlicensed sports wagering activity in violation of the Illinois Sports Wagering Act.” |
❌ Database of operators and markets
The table below provides an overview of prediction sites and state restrictions. The list of operators could grow in the coming months. Sports Illustrated has announced its intent to launch SI Predict, while “DraftKings Predict” has been registered with the National Futures Association.
| Operator | Owner | Restricted states |
|---|---|---|
| Kalshi | Private (Tarek Mansour, CEO and co-founder. Luana Lopes Lara, COO and co-founder). | None |
| Robinhood | Public (NASDAQ: HOOD) | NJ |
| Polymarket | Private (Shayne Coplan, Founder and CEO) | Not available in US |
| PredictIt | Private (Victoria University of Wellington, with support from Aristotlle, Inc.) | None |
| ForecastEx | Public (Wholly owned subsidiary of Interactive Brokers Group, Inc – Nasdaq: IBKR) | None |
| Manifold | Private (Founders: Austin Chen, James Grugett, Stephen Grugett) | DE, ID, MI, and WA |
| Drift Bet | Private (Cindy Leow and David Lu, co-founders). | None |
| Metaculus | Private (Founders: Anthony Aguirre, Max Wainwright, Greg Laughlin) | None |
| Crypto.com | Private (Operated by operated by Foris DAX Asia) | None |
✅ States with prediction sites
The table below shows the current status of prediction sites in the 50 US states and Washington, D.C. This situation is fluid and will continue to evolve. This page will be updated accordingly as new developments arise, such as individual states taking action or operators entering and exiting various markets.
| State | Available | # of sites |
| Alabama | ✅ | 9+ |
| Alaska | ✅ | 9+ |
| Arizona | ✅ | 9+ |
| Arkansas | ✅ | 9+ |
| California | ✅ | 9+ |
| Colorado | ✅ | 9+ |
| Connecticut | ✅ | 9+ |
| Delaware | ✅ | 8+ |
| Florida | ✅ | 9+ |
| Georgia | ✅ | 9+ |
| Hawaii | ✅ | 9+ |
| Idaho | ✅ | 8+ |
| Illinois | ❓ | 9+ |
| Indiana | ✅ | 9+ |
| Iowa | ✅ | 9+ |
| Kansas | ✅ | 9+ |
| Kentucky | ✅ | 9+ |
| Louisiana | ✅ | 9+ |
| Maine | ✅ | 9+ |
| Maryland | ✅ | 9+ |
| Massachusetts | ✅ | 9+ |
| Michigan | ✅ | 8+ |
| Minnesota | ✅ | 9+ |
| Mississippi | ✅ | 9+ |
| Missouri | ✅ | 9+ |
| Montana | ✅ | 9+ |
| Nebraska | ✅ | 9+ |
| Nevada | ❓ | 9+ |
| New Hampshire | ✅ | 9+ |
| New Jersey | ❓ | 8+ |
| New Mexico | ✅ | 9+ |
| New York | ✅ | 9+ |
| North Carolina | ✅ | 9+ |
| North Dakota | ✅ | 9+ |
| Ohio | ❓ | 9+ |
| Oklahoma | ✅ | 9+ |
| Oregon | ✅ | 9+ |
| Pennsylvania | ✅ | 9+ |
| Rhode Island | ✅ | 9+ |
| South Carolina | ✅ | 9+ |
| South Dakota | ✅ | 9+ |
| Tennessee | ✅ | 9+ |
| Texas | ✅ | 9+ |
| Utah | ✅ | 9+ |
| Vermont | ✅ | 9+ |
| Virginia | ✅ | 9+ |
| Washington | ✅ | 8+ |
| Washington D.C. | ✅ | 9+ |
| West Virginia | ✅ | 9+ |
| Wisconsin | ✅ | 9+ |
| Wyoming | ✅ | 9+ |
💡How it works: Event-based contracts and peer-to-peer betting
Event-based contracts are offered for speculating on the outcome of specific events. Examples include the results of an election or the winner of a professional sports championship. They function like a traditional commodities exchange, where popular attractions that are regularly traded at heavy volume include Crude Oil, Gold, and Wheat.
Are event-based contracts the same as betting on sports? From an operator perspective, they’re trading instruments, akin to other commodities, and do not fall under the sports betting umbrella. As interest soars in prediction markets, several states have pushed back, setting the stage for legal showdowns with operators.
Peer-to-peer betting allows individuals to place bets directly among themselves without a bookmaker involved. The absence of a third party in the middle of the transaction means there’s no “vig” charged by the house, and is thought to lead to fairer odds with no house edge. Terms and pricing are agreed upon by the parties involved in the wager.
📊 Tax implications on winnings
Winnings from prediction markets are taxable. Just like traditional gambling winnings from a casino or sportsbook, they are treated as ordinary income for tax purposes. Prediction market operators such as Kalshi send out annual 1099-MISC forms that list the net profits.
Regardless of the receipt of such a form, gambling winnings are required to be reported to the IRS on annual tax returns. Failure to do so could lead to trouble down the road in the form of penalties and interest. Many states also levy taxes on gambling winnings.
The best practice for winnings is to carefully track your wins and losses and keep records. We highly recommend consulting with a tax professional for reporting and tax obligations on winnings.
⚖️ Background on CFTC ruling on predictions
In 2023, Kalshi submitted a request for its Congressional Control Contracts to be approved under the Commodity Exchange Act. The CFTC rejected the request, stating that the contracts violated state gaming laws and public interest. Kalshi responded by filing suit.
The U.S. District Court for the District of Columbia ruled in favor of Kalshi in September 2024, but the legal wrangling continued. An appeal from the CFTC secured an emergency stay, but the D.C. Circuit then denied the motion in October.
This opened the door for Kalshi to offer contracts before the 2024 US elections. The platform attracted considerable interest and accepted over $250 million in contracts. Litigation has continued for KalshEx vs. CFTC.
Oral arguments were presented to the U.S. Court of Appeals for the District of Columbia in January 2025. The court expressed concerns about both arguments while also appearing skeptical of the CFTC’s broad interpretation of its regulatory authority.
The case remains unresolved, but prediction markets have moved forward. Kalshi expanded its offerings to include sports contracts in January. CFTC Acting Chairman Caroline D. Pham has expressed interest in moving toward resolution as a planned prediction markets roundtable approaches.
“As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” she said. “Innovation and new technology has created a renaissance in markets that presents new opportunities that are accessible to more people, as well as risks. The CFTC will get back to basics by hosting staff roundtables that will develop a robust administrative record with studies, data, expert reports, and public input. A holistic approach to evolving market trends will help to establish clear rules of the road and safeguards that will promote U.S. economic growth and American competitiveness.”