Companies keep investing in prediction markets despite legal battle
In this photo illustration, applications for online prediction market sites are shown 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 as platforms continue to experience massive growth, the companies that build them are keeping pace.
The Commodity Futures Trading Commission and six states across the country are engaged in lawsuits over who has the authority to develop regulations on event contracts. A total of seventeen states are challenging companies with prediction markets like Kalshi and Polymarketcoinbase And robinhood – and someone has moved to ban them altogether.
States argue that they have the authority to regulate these platforms because of their sports businesses, which they say are tantamount to gambling. Sports event contracts account for the majority of volume in prediction markets. But the CFTC argues that its right to regulate swaps and derivatives brings all these contracts under its jurisdiction.
Congress is also stepping in with its own plans. House Oversight and Government Reform Committee Chairman James Comer told CNBC’s “Squawk Box” on Friday that he had asked Kalshi and Polymarket CEOs for information about their internal efforts to regulate insider trading.
But according to comments from leaders of private companies and valuations of private companies, legal uncertainty is not shaking confidence in investing in the growth of these platforms.
“There is a lot of noise in prediction markets determining legal position,” he said Flutter Entertainment CEO Jeremy Peter Jackson said on his earnings call earlier this month. Flutter owns FanDuel Predicts. “Until we get through this and understand what the Supreme Court said, I think we’re going to live with this uncertainty.”
Despite the legal questions, Jackson said his company will continue to invest in market making on third-party prediction market platforms, a new strategy he announced in its last earnings report.
People pass a banner outside the New York Stock Exchange (NYSE) for FanDuel’s parent company, Flutter Entertainment, to go public on January 29, 2024 in New York.
Spencer Platt | Getty Images
DraftKings CEO Jason Robins said during the May earnings call that the company views the investment in the prediction market platform as a long-term proposition.
“Obviously, there’s always the possibility that something or other changes could happen in terms of legislation, but assuming an environment that’s consistent with what we’re seeing today, I think we’ll continue to invest in 2027.”
Legal problems do not slow down the growth of private companies either. Kalshi says its valuation is now $22 billion This follows a recently announced funding round, up from $11 billion in December. Polimarket’s reportedly $15 billion valuation from 9 billion dollars In October.
Terrence Duffy, CME Group The CEO, who helped develop FanDuel Predicts, said on an earnings call last month that while the legal fuss is about sports, other event conventions such as economics, politics and financial forecasts are under less scrutiny. He thinks that’s why they grew up. Bernstein predicts that sports contracts will account for only 30% of volumes by 2030.
Robinhood CEO Vlad Tenev said that although he disagreed with the states, he understood their frustrations.
“I would love it if states didn’t have concerns, but at the same time… it’s not unreasonable, right?” he said on Robinhood’s April earnings call. “This is a jurisdictional dispute… and that’s something that will play out in the coming years.”
Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and minority investment.
