Sports Prediction Markets: Essential Query Resolution
Polymarket, a well-known international prediction market platform, is set to make its entrance into the U.S. stock market during the NFL season, following its acquisition of a CFTC registered exchange and clearinghouse. This move comes after Crypto.com and Kalshi had already started offering sports prediction markets in all 50 states, back in late December and January respectively.
Prediction markets, which have been operational internationally for decades, offer 'yes' and 'no' contracts on a variety of real-world events, including elections, papal conclaves, movie review scores, and sports. These markets have gained popularity as their contract prices correspond with the live probability of a stock market event outcome happening, as determined by the public's collective beliefs at a given moment.
Before Crypto.com and Kalshi, only Sporttrade had active sports prediction markets in the U.S. stock market, albeit with a different approach. Notably, Polymarket does not charge fees to its international customers but is expected to implement fees once it enters the U.S. stock market.
In the U.S. stock market, sports has become the dominant prediction market menu item as regulations have loosened. FanDuel, for instance, recently partnered with CME Group to offer non-sports contracts and potential ones involving sports in the future. Robinhood, with its foray into prediction markets, has seen its stock price gain more than 100% in the first half of 2025.
However, the legality of sports prediction markets is still a contentious issue. If courts rule that event futures trading is gambling, financial technology platforms could face significant hurdles, as their customer base would shrink to states where mobile betting has been legalized. The U.S. Court of Appeals for the Third Circuit is currently considering a case regarding the legality of sports prediction markets, with New Jersey receiving support from a group of 34 states.
The nominee to lead the Commodity Futures Trading Commission (CFTC), Brian Quintenz, is a Kalshi board member and has argued in favour of sports prediction markets being under CFTC control. However, most U.S. state attorneys general, tribal groups, sportsbooks, and gambling addiction organizations argue that sports prediction markets should be considered gambling and overseen by state gaming commissions.
Interestingly, prediction market platforms in the U.S. stock market do not pay the state gambling taxes that sportsbook operators do, as they have not been legally defined as gambling. This could change if courts rule otherwise, potentially impacting the financial landscape of these platforms.
Kalshi CEO Tarek Mansour describes prediction markets as a 'truth machine,' reflecting their potential to provide accurate predictions based on collective wisdom. As these markets continue to grow and evolve, it will be fascinating to see how they shape the future of betting and forecasting in the U.S. stock market and beyond.
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