Legal
Prediction Market Regulation Heats Up as States Lose $600 Million in Tax Revenue
March 19, 2026 | Geoff Hawkins
Eleven states have introduced state prediction market legislation in 2026, with approaches ranging from full bans to taxation frameworks, while Hawaii and Kentucky have advanced bills furthest through their legislative processes. State regulators in eleven states have issued cease and desist orders against prediction market operators, arguing they function as unlicensed sports betting platforms that cost states over $600 million in state sports betting tax revenue. The CFTC under Chair Michael Selig has asserted CFTC prediction market jurisdiction, reversing the Biden Administration's cautious stance and setting up a direct conflict with state regulators over who controls this emerging industry. Kalshi reported nearly $1.9 billion in college basketball wagers in February 2026 alone, demonstrating the prediction market regulation challenges states must address as these platforms compete directly with regulated sportsbooks during events like March Madness. Federal courts have issued conflicting rulings on state cease and desist orders against prediction market operators, with some granting temporary relief to platforms like Kalshi while others have sided with state regulators, likely pushing this dispute toward the Supreme Court.
-eee9cd-400px.jpeg)
