Companies Invest in Prediction Markets Despite Regulatory Uncertainty

States and the federal government are disputing which level of authority holds the power to regulate prediction markets. The Commodity Futures Trading Commission and six states are involved in lawsuits over jurisdiction for event contracts. Seventeen states are challenging companies operating these platforms, and one state has moved to ban them.

Sports event contracts account for the majority of trading volume on prediction markets. States argue they can regulate the platforms because the contracts resemble sports gambling. The CFTC maintains that its authority over swaps and derivatives covers these contracts.

Statements on Continued Investment Flutter Entertainment CEO

Jeremy Peter Jackson said on an earnings call earlier this month that the company will continue investing in market-making on third-party prediction market platforms. "There's a lot of noise around the legal position-setting prediction markets," Jackson said.

" DraftKings CEO Jason Robins said on a May earnings call that the company views its prediction market investment as long-term. "Assuming a consistent environment to what we see today, I expect that we'll continue to invest in 2027," Robins said.

Kalshi announced a valuation of $22 billion following a recent funding round, up from $11 billion in December. Polymarket's reported valuation reached $15 billion, compared with $9 billion in October. CME Group CEO Terrence Duffy said on an earnings call last month that non-sports event contracts face less regulatory scrutiny.

Robinhood CEO Vlad Tenev said on an April earnings call that he understands state concerns about jurisdiction. "This is a jurisdictional dispute … and this is something that'll play out in the coming years," Tenev said. House Oversight and Government Reform Committee Chairman James Comer stated on Friday that he is seeking information from Kalshi and Polymarket on their internal efforts to regulate insider trading.