Prediction markets have become a court battle. Now federal regulators and US states are openly competing over who has the authority to oversee these markets – and, by extension, over who controls a new, fast-growing segment of business activity.
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A federal appeals court ruled this week that sports contracts with Calci are federally regulated derivatives and not gambling. In parallel, the CFTC sued three states to block their enforcement actions.
Polymarket has begun rolling out its largest infrastructure upgrade to date. Binance Wallet has added direct access to prediction markets for retail users.
Product and distribution moved forward. The legal battle has moved to the courts.
What moved the markets this week?
Courts and regulators take the lead
The legal battle over prediction markets advanced on several fronts this week. The Third Circuit ruled that Calci’s sports contracts fall under the Financial Derivatives Act, not state gambling laws that limit states’ ability to prohibit them. The ruling is preliminary, not a final decision on the merits, but it buys time.
The CFTC and the Justice Department separately filed suit against Arizona, Connecticut and Illinois, arguing that state enforcement actions are preempted by federal law. More cases are in progress.
The Ninth Circuit is scheduled to hear consolidated arguments involving Calci, Robinhood, and Crypto.com on April 16. The dispute now centers on the authority that regulates these proceedings.
Polymarket is rebuilding its core
Polymarket is rolling out what it calls… The largest infrastructure upgrade Since its launch. The platform exchanges its underlying collateral assets for a private token – Polymarket USD – backed 1:1 by USDC held in reserve.
This move reduces reliance on pooled assets and risks associated with third-party infrastructure. Polymarket is also rebuilding its trading engine to reduce costs and improve execution speed. The upgrade adds support for multi-signature wallets, which is a requirement for institutional users.
The timing is deliberate. A fully regulated collateral layer and an updated trading system are prerequisites for an orderly US relaunch and expanded institutional reach.
He gets into retail — and gets the credit
Access to prediction markets is expanding beyond dedicated platforms.
Binance Wallet introduced a feature this week Allowing users to take stances on real-world events directly from the app, lowering the barrier for retail participants. The rollout is part of a broader push to reach users who don’t want a specialized setup.
Meanwhile, Kalshi’s founders continue to say so Retail users are not just participants – It is a major source of predictive accuracy. CEO Tariq Mansour said the platform’s performance comes from a broad base of users “trading outside their garage,” rather than traditional financial professionals.
More users now have direct access, and platforms are actively positioning retailers as the primary hub for price formation.
Quote of the week
Tarek Mansour, CEO of Kalshi, appeared on The Axios Show on April 7, where he addressed insider trading enforcement in prediction markets:
“It’s our responsibility as an exchange and the regulators’ responsibility to identify these bad actors, as well as detect and deter their actions. You punish them when you find someone who did something bad. It’s a good thing.”
Mansour added that if there is a yes/no hold on Calcchi on whether the CFTC will open an investigation into insider trading within the next year, he expects it to trade at “yes.”
Week number
30 million dollars. This is the amount that was traded Track Kalshi Market Whether tech layoffs in 2026 will exceed last year’s total remains to be seen.
The contract is growing rapidly and has already outpaced some of the platform’s key entertainment markets – a sign of rising demand for contracts linked to economic data.
Friction of the week
The central tension this week is between federal regulatory expansion and state power over consumer protection. Not only does the CFTC defend its jurisdiction in court, it actively sues states, files injunctions, and uses the Third Circuit ruling as a model.
Her argument is consistent: predictive market contracts are federally regulated derivatives, and states cannot recharacterize them as gambling to justify enforcement.
Countries are not backing down. Connecticut AG William Tong called the contracts “clearly unlicensed illegal gambling.” More than 34 states have filed amicus briefs asserting their regulatory authority. A bipartisan coalition of more than 20 senators has urged the CFTC to stay out of litigation altogether.
The federal government on Thursday filed a lawsuit against the states of Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators, companies that Connecticut Attorney General William Tong says are “clearly unlicensed illegal gambling.” https://t.co/r1UuCQmMzq
– Spectrum News 13 (@MyNews13) April 3, 2026
The platforms are located in the middle. They argue that they are regulated exchanges operating under federal law — while simultaneously managing markets based on war, political outcomes, and now tech layoffs.
Mansour welcomed federal enforcement against bad actors this week. But the same federal authority that Calci relies on to defeat state gambling laws is also drafting rules on margin trading, insider trading, and public interest prohibitions — rules that could restrict what contracts platforms can list at all.
The CFTC is both a shield and its regulator. How much power do you choose to exercise on both fronts? It is a question that neither party has answered.
Bottom line
The regulatory issue was not resolved this week. The Third Circuit sided with Kalshi. The CFTC has stepped up by suing three states. There are more rulings to come, and the outcome will likely be shaped across multiple jurisdictions rather than by any single decision.
The market doesn’t wait. Platforms are rebuilding infrastructure, expanding distribution, and listing contracts linked to economic data alongside politics and sports.
Prediction markets now operate on two paths: legal definitions are being tested in court, while usage continues to grow.
Prediction markets have become a court battle. Now federal regulators and US states are openly competing over who has the authority to oversee these markets – and, by extension, over who controls a new, fast-growing segment of business activity.
Singapore Summit: Meet the top APAC brokers you know (and those you don’t know yet!)
A federal appeals court ruled this week that sports contracts with Calci are federally regulated derivatives and not gambling. In parallel, the CFTC sued three states to block their enforcement actions.
Polymarket has begun rolling out its largest infrastructure upgrade to date. Binance Wallet has added direct access to prediction markets for retail users.
Product and distribution moved forward. The legal battle has moved to the courts.
What moved the markets this week?
Courts and regulators take the lead
The legal battle over prediction markets advanced on several fronts this week. The Third Circuit ruled that Calci’s sports contracts fall under the Financial Derivatives Act, not state gambling laws that limit states’ ability to prohibit them. The ruling is preliminary, not a final decision on the merits, but it buys time.
The CFTC and the Justice Department separately filed suit against Arizona, Connecticut and Illinois, arguing that state enforcement actions are preempted by federal law. More cases are in progress.
The Ninth Circuit is scheduled to hear consolidated arguments involving Calci, Robinhood, and Crypto.com on April 16. The dispute now centers on the authority that regulates these proceedings.
Polymarket is rebuilding its core
Polymarket is rolling out what it calls The largest infrastructure upgrade Since its launch. The platform exchanges its underlying collateral assets for a private token – Polymarket USD – backed 1:1 by USDC held in reserve.
This move reduces reliance on pooled assets and risks associated with third-party infrastructure. Polymarket is also rebuilding its trading engine to reduce costs and improve execution speed. The upgrade adds support for multi-signature wallets, which is a requirement for institutional users.
The timing is deliberate. A fully regulated collateral layer and an updated trading system are prerequisites for an orderly US relaunch and expanded institutional reach.
He gets into retail — and gets the credit
Access to prediction markets is expanding beyond dedicated platforms.
Binance Wallet introduced a feature this week Allowing users to take stances on real-world events directly from the app, lowering the barrier for retail participants. The rollout is part of a broader push to reach users who don’t want a specialized setup.
Meanwhile, Kalshi’s founders continue to say so Retail users are not just participants – It is a major source of predictive accuracy. CEO Tariq Mansour said the platform’s performance comes from a broad base of users “trading outside their garage,” rather than traditional financial professionals.
More users now have direct access, and platforms are actively positioning retailers as the primary hub for price formation.
Quote of the week
Tarek Mansour, CEO of Kalshi, appeared on The Axios Show on April 7, where he addressed insider trading enforcement in prediction markets:
“It’s our responsibility as an exchange and the regulators’ responsibility to identify these bad actors, as well as detect and deter their actions. You punish them when you find someone who did something bad. It’s a good thing.”
Mansour added that if there is a yes/no hold on Calcchi on whether the CFTC will open an investigation into insider trading within the next year, he expects it to trade at “yes.”
Week number
30 million dollars. This is the amount that was traded Track Kalshi Market Whether tech layoffs in 2026 will exceed last year’s total remains to be seen.
The contract is growing rapidly and has already outpaced some of the platform’s key entertainment markets – a sign of rising demand for contracts linked to economic data.
Friction of the week
The central tension this week is between federal regulatory expansion and state power over consumer protection. Not only does the CFTC defend its jurisdiction in court, it actively sues states, files injunctions, and uses the Third Circuit ruling as a model.
Her argument is consistent: predictive market contracts are federally regulated derivatives, and states cannot recharacterize them as gambling to justify enforcement.
Countries are not backing down. Connecticut AG William Tong called the contracts “clearly unlicensed illegal gambling.” More than 34 states have filed amicus briefs asserting their regulatory authority. A bipartisan coalition of more than 20 senators has urged the CFTC to stay out of litigation altogether.
The federal government on Thursday filed a lawsuit against the states of Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators, companies that Connecticut Attorney General William Tong says are “clearly unlicensed illegal gambling.” https://t.co/r1UuCQmMzq
– Spectrum News 13 (@MyNews13) April 3, 2026
The platforms are located in the middle. They argue that they are regulated exchanges operating under federal law — while simultaneously managing markets based on war, political outcomes, and now tech layoffs.
Mansour welcomed federal enforcement against bad actors this week. But the same federal authority that Calci relies on to defeat state gambling laws is also drafting rules on margin trading, insider trading, and public interest prohibitions — rules that could restrict what contracts platforms can list at all.
The CFTC is both a shield and its regulator. How much power do you choose to exercise on both fronts? It is a question that neither party has answered.
Bottom line
The regulatory issue was not resolved this week. The Third Circuit sided with Kalshi. The CFTC has stepped up by suing three states. There are more rulings to come, and the outcome will likely be shaped across multiple jurisdictions rather than by any single decision.
The market doesn’t wait. Platforms are rebuilding infrastructure, expanding distribution, and listing contracts linked to economic data alongside politics and sports.
Prediction markets now operate on two paths: legal definitions are being tested in court, while usage continues to grow.
