US President Donald Trump has identified prediction markets as one of the technology sectors in which the United States should maintain global leadership, alongside artificial intelligence and cryptocurrency.
At the same time, the rapid growth of the sector has brought prediction-market operators into direct conflict with US gambling regulators. The main dispute concerns sports contracts offered by Kalshi and Polymarket. Regulators in several states argue that these products effectively function as sports bets and should therefore be subject to the same licensing rules as traditional sportsbooks.
According to the Kennedy Forum, sports-event contracts account for around 75–90% of Kalshi’s trading volume and roughly half of Polymarket’s activity. A significant part of the prediction-market business is therefore already closely tied to traditional sports betting.
The platforms operate under federal oversight from the Commodity Futures Trading Commission (CFTC), while state regulators argue that they should have the authority to regulate contracts linked to sporting events.
The dispute has also spread beyond the US. Brazil, Spain, France, Australia, Colombia, Portugal and Singapore have introduced restrictions or taken other action against Polymarket over gambling-related concerns.
Despite the regulatory pressure, prediction markets continue to attract major investment. Kalshi has reportedly been valued at around $40 billion, while Polymarket has reached a valuation of approximately $20 billion in recent investment discussions. Traditional sportsbook operators including DraftKings, FanDuel, Fanatics and Underdog are also moving into the prediction-market space.
The issue comes as sports betting continues to expand across the US. State-licensed sportsbooks generated almost $17 billion from American bettors in 2025.
Trump’s support does not settle the legal dispute over how sports contracts should be classified or which regulators should oversee them. It does, however, signal that the administration sees prediction markets as a strategically important sector.
For Kalshi, Polymarket and other operators, that could provide additional political support. For states seeking to regulate sports betting, however, it could create an even more difficult challenge.
Source: TheLines
