Prediction Market Lawsuits Spread Across States

Regulators in Massachusetts, Nevada, and Connecticut challenge federal oversight of sports-based event contracts

Published on Feb. 17, 2026

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A growing number of states are taking legal action against prediction market operators like Polymarket and Kalshi, arguing that their sports-based event contracts should be subject to state gambling laws rather than federal oversight. Massachusetts, Nevada, and Connecticut have either sued, taken enforcement action, or questioned the legitimacy of these contracts, while lawmakers in New York, Illinois, and Ohio are also scrutinizing how the industry should be regulated.

Why it matters

The dispute highlights a fundamental question over whether these prediction market contracts are financial instruments governed by federal law or constitute sports betting subject to state gaming regulation. The outcome could have major implications for the future of the prediction market industry and its relationship with traditional sportsbooks.

The details

Polymarket has filed a federal lawsuit against Massachusetts regulators, arguing that its event contracts fall under the Commodity Exchange Act and are therefore regulated exclusively by the US Commodity Futures Trading Commission (CFTC). However, Massachusetts insists the contracts are akin to sports betting and must comply with state licensing requirements. Nevada has also taken enforcement action and filed a lawsuit against Polymarket, while Connecticut ordered prediction market operators to cease activities, leading Kalshi to file its own lawsuit challenging the state's position.

  • In July 2025, Polymarket filed a federal lawsuit against Massachusetts Attorney General Andrea Joy Campbell.
  • In August 2025, Nevada regulators filed a civil complaint against Polymarket.
  • In December 2025, Connecticut ordered prediction market operators to cease activities, and Kalshi filed a lawsuit against the state's Department of Consumer Protection.

The players

Polymarket

A prediction market platform that offers contracts based on the outcome of real-world events, including sports.

Andrea Joy Campbell

The Attorney General of Massachusetts.

Nevada Gaming Control Board

The regulatory body that oversees Nevada's gaming industry.

Kalshi

A prediction market operator that filed a lawsuit against the Connecticut Department of Consumer Protection.

Connecticut Department of Consumer Protection

The state agency that ordered prediction market operators to cease activities in Connecticut.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

The judge in the Polymarket v. Campbell case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.