A legal primer on prediction markets: Part 1
Prediction markets and the question of Federal preemption of State gambling law
The question presented: Swap or bet
Prediction markets have grown from a niche forecasting tool into a mainstream data source—cited by Bloomberg, CNN, The Wall Street Journal, and the Financial Times and backed by a 2026 Federal Reserve working paper that found Kalshi's macro markets matched or beat professional forecasters on key economic indicators. But that explosive growth has collided with a fundamental legal question now heading toward the Supreme Court of the United States: Are event contracts federally regulated derivatives, state-regulated bets, or somehow both? Our white paper—the first in a three-part series—maps the escalating court battle over the Commodity Futures Trading Commission’s jurisdiction, the circuit split that has emerged, and what's at stake for markets, regulators, and practitioners.
