New York can restrict sports gambling on prediction markets, US judge rules
A US judge ruled that New York can restrict sports gambling on prediction markets, upholding the state's authority to regulate such activities. The decision allows New York to block platforms like Kalshi and Polymarket from offering event-based contracts on sports outcomes, treating them as illegal gambling under state law.
Background
- Prediction markets (like Kalshi, PredictIt) allow people to bet money on the outcome of future events — elections, sports, economic data — creating a "market price" for each outcome.
- They operate in a legal grey zone: the CFTC (Commodity Futures Trading Commission, a federal regulator) classifies them as "event contracts" under commodities law, but states like New York argue they are simply unlicensed gambling.
- This ruling (July 2026) lets New York treat sports-related event contracts as illegal sports betting, even though the same platforms may still offer non-sports contracts (e.g., election predictions) in the state.
- Tension: federal regulators have slowly allowed prediction markets to operate, but individual states retain power to ban them under their own gambling laws — creating a patchwork where a platform might be legal in 49 states but shut down in New York.
- Why it matters: prediction markets are increasingly cited by tech and finance figures as more accurate forecasting tools than polls or experts; this decision threatens their growth and tests whether such markets will be treated as an innovative financial product or as gambling.