Willkie Practitioner Handbook Series
State of Play: Prediction Market Exchanges is the definitive legal guide to the regulatory battles, high-stakes litigation, and legislative developments shaping the future of prediction markets in 2026.
Prediction market exchanges—including Polymarket, Kalshi, and Crypto.com—generated over $60 billion in trading volume in 2025, a 300% year-over-year increase, with continued growth expected. The central legal question is whether prediction market exchanges are gambling platforms subject to state law or derivatives exchanges subject to exclusive federal regulation by the CFTC under the Commodity Exchange Act.
Prediction Market Litigation. As of April 2026, prediction market exchanges are plaintiffs in lawsuits against ten states, defendants in actions brought by six states and two Indian Tribes, targets of multiple consumer class actions, and subjects of coordinated lawsuits under 18th-century anti-gambling statutes. The Third Circuit recently became the first federal appellate court to rule on these issues, affirming a preliminary injunction in favor of a prediction market exchange against New Jersey. A forthcoming Ninth Circuit decision could create a circuit split—potentially fast-tracking the federal preemption question to the Supreme Court.
Prediction Market Legislation and CFTC Regulation. Eleven states have proposed legislation to regulate prediction markets, and Congress has introduced bills ranging from insider trading prohibitions to categorical bans on certain contract types. The CFTC has asserted exclusive federal jurisdiction, advised states they lack authority to regulate prediction markets, filed suit against three states, and issued an Advance Notice of Proposed Rulemaking seeking public comment on how the Commodity Exchange Act applies to event contracts and prediction markets.
State of Play brings together litigation, legislation, and regulatory developments in a single resource—equipping litigators, in-house counsel, compliance teams, and industry leaders with the analysis needed to navigate prediction market law as it evolves.
Read the full handbook here.
