Sportsbooks and trading apps expand U.S. prediction markets amid regulatory pushback
Sportsbooks and trading apps are beefing up U.S. prediction markets — from standalone platforms like Polymarket and CFTC‑regulated Kalshi, to in‑app integrations via Robinhood (and soon Coinbase) and sportsbook‑tied offerings such as Fanatics Markets and DraftKings Predictions — aiming to embed event betting where users already hold funds and potentially siphon activity from traditional sportsbooks. The push has met regulatory headwinds: DraftKings’s service is unavailable in at least 11 states amid state-by‑state legal talks, major operators have split from the American Gaming Association which argues prediction markets are unlawful, and lawmakers are proposing a federal ban on insider trading in prediction markets after lucrative Polymarket trades, even as firms like Kalshi say they already prohibit such conduct.
📌 Key Facts
- U.S. prediction markets are expanding along three fronts: standalone services (e.g., Polymarket, Kalshi), broker/app integrations (Robinhood and soon Coinbase), and separate prediction‑market apps tied to major sportsbooks (DraftKings Predictions, Fanatics Markets, with FanDuel preparing one).
- Fanatics launched its prediction‑market app, Fanatics Markets, about two weeks before DraftKings launched DraftKings Predictions; FanDuel is preparing a similar service.
- DraftKings Predictions will not offer sports contracts in every jurisdiction and is entirely unavailable in at least 11 states, a restriction Corey Gottlieb attributes to ongoing state‑by‑state regulatory discussions.
- DraftKings, Fanatics and FanDuel left the American Gaming Association over disagreements about prediction markets; the AGA, backed by MGM, Caesars and other casinos, is running a campaign arguing prediction markets are unlawful.
- Industry analysts say prediction markets could be embedded in many apps where users already hold money, lowering the friction to place event bets and potentially siphoning activity from traditional sportsbooks.
- Rep. Ritchie Torres introduced the 'Public Integrity in Financial Prediction Markets Act of 2026,' a bill that would ban federal elected officials, political appointees and bureaucrats from trading on prediction sites based on non‑public information, adopting a securities‑style insider‑trading standard for prediction markets.
- The proposed legislation was prompted by large, profitable trades on Polymarket contracts about Nicolás Maduro’s ouster — including a reported trade that netted an unknown trader more than $400,000 shortly before Maduro was captured and extradited to the U.S.
- Kalshi says it is already regulated by the CFTC, bans insider trading on its platform, supports measures to prevent such activity, and that the recent suspicious trades occurred on a different platform; it is unclear whether House leadership will bring the bill to a floor vote or whether the president would sign it.
📊 Relevant Data
Asian adults in the US have the highest rate of cryptocurrency usage at 11%, compared to 9% for Hispanic adults, 8% for Black adults, and 6% for White adults, while Asians comprise about 6% of the US population, Hispanics 19%, Blacks 13%, and Whites 59%.
Who is using cryptocurrency? — USAFacts
In addition to the Maduro trades, a Polymarket trader allegedly profited over $1 million in December 2025 from insider knowledge of Google's Year in Search data, indicating multiple recent suspected insider trading incidents on the platform.
Alleged Insider Nets $1 Million On Polymarket In 24 Hours — Forbes
Latinos are the ethnic group most likely to have bet on sports events in the US, with higher frequency compared to other groups, while comprising about 19% of the population.
Sports betting frequency in the US by ethnicity 2025 — Statista
📊 Analysis & Commentary (3)
"The piece argues that Las Vegas’ recent push to maximize gambling revenue was short‑sighted — exposing the industry to rapid disruption from low‑friction, app‑based prediction markets and a fragmented regulatory landscape that could erode the Strip’s hold on wagering and profits."
"Using the ACX–Metaculus contest as a case study, the piece praises forecasting competitions as useful epistemic tools but argues their value depends on careful scoring, aggregation, transparency and safeguards against gaming and regulatory risks."
"A critical take arguing that internet-era features — especially embedded prediction markets, clip culture and platformized distribution — are fragmenting and commodifying sports consumption, threatening the traditional economic and cultural life of sports even as they create new forms of engagement and revenue."
📰 Sources (3)
- Rep. Ritchie Torres (D-N.Y.) is introducing the 'Public Integrity in Financial Prediction Markets Act of 2026,' a three-page bill that would make it illegal for federal elected officials, political appointees and bureaucrats to engage in insider trading on prediction sites like Polymarket.
- The bill defines prohibited conduct as trading based on non‑public information that a reasonable investor would consider important in making an investment decision, tailoring the familiar securities-law insider trading standard to prediction markets.
- The legislation is a direct response to large, profitable trades on Polymarket contracts about Nicolás Maduro’s ouster placed shortly before the Venezuelan president was captured and extradited to the U.S., including a Friday trade that reportedly netted more than $400,000 for an unknown trader.
- Kalshi spokesperson Elisabeth Diana said Kalshi is already regulated by the CFTC, bans insider trading on its platform, supports measures to prevent such activity, and that the suspicious activity in recent days occurred on a different platform, not Kalshi.
- It is unclear whether House Speaker Mike Johnson will bring the bill to a vote or whether President Trump would sign it; their offices did not immediately comment.
- Places DraftKings Predictions in a three-front competitive landscape: (1) standalone services like Polymarket and Kalshi, (2) app integrations via Robinhood and soon Coinbase, and (3) separate prediction-market apps tied to major sportsbooks such as DraftKings and Fanatics.
- Reports that Fanatics launched its own prediction-market app, Fanatics Markets, about two weeks before DraftKings Predictions, and that FanDuel is preparing a similar service.
- Details that DraftKings Predictions will not offer sports contracts in every jurisdiction and is entirely unavailable in at least 11 named states, with Corey Gottlieb attributing this to ongoing state-by-state regulatory discussions.
- Reveals that DraftKings, Fanatics and FanDuel all left the American Gaming Association over disagreements about prediction markets, while the AGA (backed by MGM, Caesars and other casinos) is running a campaign arguing prediction markets are unlawful.
- Includes industry analysis that prediction markets may become embedded in many apps where users already hold money, potentially siphoning activity from traditional sportsbooks by lowering the friction of placing event bets.