Prediction Markets Weekly Roundup: Kalshi’s State Battles Grow as Industry Expands
Federal insider trading probes and fresh political pressure add more layers to an already contentious week for prediction markets.
This week in prediction markets was highlighted by escalating litigation in Connecticut and Montana, while the industry continued to grow through new entry announcements, data partnerships and distribution deals.
Reports also emerged that federal authorities were continuing to probe possible prediction market insider trading, while Donald Trump Jr. and the White House became more directly involved in state-level debates over the industry.
Here are the biggest prediction market developments from the past week.
Prediction Market Legal Battles Continue
Connecticut Files New Enforcement Lawsuit Against Kalshi
Connecticut filed a new enforcement lawsuit seeking to stop Kalshi from offering sports event contracts in the state.
State officials allege Kalshi is operating an unlicensed sports wagering business and violating the Connecticut Unfair Trade Practices Act. The state is requesting an injunction, civil penalties and disgorgement of revenue generated in Connecticut.
Kalshi has already removed the lawsuit to federal court, while its separate Second Circuit appeal over whether federal law preempts Connecticut’s regulation of its sports contracts remains pending.
Montana Judge Denies Kalshi Injunction, Lifts Stay
Kalshi’s long-paused Montana lawsuit is moving again. On Aug. 27, U.S. District Judge Donald Molloy denied both another stay and the operator’s preliminary injunction request.
The parties had twice agreed to pause the case and sought a third extension. Molloy rejected that request, finding they had failed to provide a reason or show good cause for another stay. The judge ordered Montana to respond to Kalshi’s complaint within 21 days.
Molloy also found that Kalshi’s repeated stays for months undermined its ability to establish the likelihood of irreparable harm required for a preliminary injunction. He denied the motion without prejudice, meaning Kalshi could potentially refile another request.
Kalshi sued Montana in April. The operator challenges the state officials’ attempt to apply state gambling laws to its platform.
Novig Cases Paused in Massachusetts, New Mexico
Novig moved to pause two of its five lawsuits against state regulators this week.
A federal judge granted a stay in Massachusetts until the the state’s Supreme Judicial Court rules on Kalshi’s appeal over sports event contracts. Novig and New Mexico officials also moved to stay their dispute until August 2027 while a separate CFTC lawsuit against the state plays out.
New Developments in Prediction Market Insider Trading Cases
This week saw developments in both federal prediction market insider trading cases, and reports emerged suggesting more are on the way.
The case against U.S. Army Special Forces soldier Gannon Ken Van Dyke has been stayed while his parallel criminal prosecution proceeds. Meanwhile, Google engineer Michele Spagnuolo moved to dismiss charges against him, arguing the contracts constituted gambling rather than swaps regulated under U.S. commodities law.
The developments came as new reporting detailed two additional potential cases involving a U.S. servicemember and a KPMG employee.
Prediction Markets Expand Products and Distribution
Kalshi Builds California Presence With MLB Deals
Kalshi expanded its sports marketing footprint by signing partnerships with five MLB teams, including three in California: the Los Angeles Dodgers, San Diego Padres and San Francisco Giants.
The deals come as prediction market companies increasingly target California, where sports betting has not been legalized but federally-regulated event contracts are available.
Prospect Markets Secures Introducing Broker Registration
Prospect Markets moved closer to launching in the U.S. after its brokerage subsidiary registered as an introducing broker with the CFTC and became an NFA member. The company said the move is part of its broader U.S. rollout.
As an introducing broker, Prospect can bring in and onboard customers, but cannot hold their funds or maintain their accounts. Those functions will be handled by Crypto.com’s federally regulated prediction market exchange.
The company said it plans to focus initially on sports event contracts.
High Roller Targets 2026 ROLR Launch
High Roller Technologies CEO Seth Young confirmed that the company expects to launch its ROLR prediction market platform before the end of 2026.
Young told Gambling Insider that most of the regulatory and technology work is complete and that the company has a target launch date, though it has not yet made it public.
High Roller registered ROLR as an introducing broker, with Crypto.com providing the underlying exchange infrastructure.
Novig Removes American Odds From Trading Interface
Novig has stopped displaying American odds on its prediction market interface, shifting entirely to percentage-based pricing. CEO Jacob Fortinsky said the change is another step toward building a product that looks like “what it is: a financial market,” rather than a sportsbook.
The company also launched an odds calculator that allows users accustomed to sportsbook pricing to convert between percentages, American odds and other formats.
The move comes after the CFTC warned prediction market operators against using sportsbook-style American odds.
Polymarket, Sportradar Expand Sports Partnership
Polymarket and Sportradar expanded their partnership to cover more than 20 sports leagues and competitions representing about 300,000 matches annually.
The agreement adds Sportradar data and content covering competitions including the Bundesliga, Euroleague Basketball and tennis Grand Slams. It also includes exclusive streaming for certain competitions and expands integrity services provided to Polymarket.
The deal builds on Sportradar’s broader push into prediction markets. In its Q2 earnings report, management said it expects the sector to generate millions of dollars in revenue for the company this year.
Prediction Markets Draw White House Attention
Trump Jr., White House Engage in State-Level Fight
The prediction market industry’s battle with state regulators also took on a more overt political dimension this week.
A New York Times investigation found Donald Trump Jr. made a closed-door pitch for prediction markets to Republican state attorneys general earlier this year. The White House separately communicated with North Carolina lawmakers as they considered legislation affecting the industry.
Kalshi later responded to the Times report, accusing the publication of ignoring answers that did not fit its narrative. On Trump Jr.’s appearance at the Republican attorneys general retreat, Kalshi said:
“He’s a fan of the industry and has his own views. He provides advice on marketing strategy, but he does not advise on regulatory matters.”
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