Big leagues
Kalshi’s Mansour predicts federal insider trading cases
Kalshi CEO says it’s the job of federal regulators to punish offenders.
Breaking: Evolution to add Playtech as defendant in defamation case.
Prediction markets face a regulatory reckoning, say analysts.
Punters in the UK are balking at affordability checks, says survey.
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I’ll do my job…
Center of attention: Kalshi founder Tarek Mansour believes federal regulators will bring insider trading or fraud cases against prediction market participants within the next 12 months amid meteoric sector growth.
Speaking to Axios, Mansour said enforcement would be a natural and welcome part of the market maturing, with exchanges and regulators both responsible for detecting, deterring and punishing misconduct.
“Our job as an exchange and the job of regulators” is to “flag these bad actors and detect and deter,” he said, adding “you punish them when you find someone who did something bad.”
The warning reflects a broader concern hanging over markets tied to politics, war, sports and entertainment, where rapid growth has brought a parallel rise in questions about market abuse.
Kalshi said it has already tightened safeguards, including blocking athletes from trading on their own games and political candidates from trading on their own campaigns.
Headed for the future: Earlier this week, the prediction market operator drew blood in its year long fight with New Jersey after the US Court of Appeals for the Third Circuit said the company is likely to succeed in arguing that federal law preempts state gambling restrictions.
The ruling keeps in place a lower-court injunction blocking New Jersey regulators from enforcing state law against the company while the case proceeds.
The panel said Kalshi’s sports-event contracts, traded on a Commodity Futures Trading Commission (CFTC)-licensed designated contract market, fit within the federal derivatives framework and fall under the Commission’s exclusive jurisdiction.
Mansour hailed the decision as a win for the company and the wider sector, although one judge dissented and said the contracts look much more like conventional sports betting.
CFTC chair Mike Selig has signaled support for the sector and for efforts to resist state attempts to shut prediction markets down. His agency recently sued Illinois, Arizona and Connecticut in an effort to assert regulatory dominance.
After the Garden: Kalshi is already trying to use the Third Circuit decision beyond New Jersey, adding it to a fresh Arizona filing as the first federal appellate ruling to address directly whether the Commodity Exchange Act preempts state gambling law in this context.
The company said the opinion should carry weight in other cases, including ahead of a Ninth Circuit hearing on April 16 that is expected to test similar questions.
The Third Circuit also found Kalshi would face irreparable harm without an injunction, citing the threat of civil and criminal penalties as well as reputational and economic damage.
That gives Kalshi a cleaner appellate precedent than it has had so far, even as states, including Nevada, Ohio and Arizona, continue pushing to characterize its products as gambling subject to local control.
This could be the start of something big: Monday’s ruling will give other judges a precedent, but the dissent in the decision could be seen as a ‘bellwether’ of mixed opinions, said gaming attorney Daniel Wallach.
If New Jersey seeks and is granted a hearing with a larger panel of appeals court judges, it could end up similar to the case that ultimately granted states control over their own sports gambling laws, Wallach noted.
“This one has even greater significance potentially because it goes beyond sports betting,” he said.
“It’s an important public question of national significance affecting not only sports gambling, but the limits and extent of federal powers to regulate gambling in the face of contrary state regulation.”
With friends like these: Meanwhile, Kalshi’s lobbying hiring drive is continuing, with Heather McHugh and Meghan Taira of Resolution Public Affairs registered in January to push for the “development of regulatory structures around prediction markets,” adding two former Sen. Chuck Schumer legislative directors to the company’s outside bench.
The Democratic hires follow Kalshi’s move last week to bring in former Barack Obama advisor Stephanie Cutter, as bipartisan interest in tighter rules for prediction markets gathers pace.
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Evolution adds Playtech to action
BREAKING: Evolution said it will move to add Playtech as a defendant in its ongoing defamation lawsuit, escalating a long-running dispute tied to a 2021 report produced by intelligence firm Black Cube.
Evolution alleges the report contained false claims designed to damage its business and reputation, while regulators later found no evidence of wrongdoing.
Playtech denies the allegations, maintaining the investigation was legitimate and focused on compliance concerns.
The case, originally filed in 2021, is expected to continue throughout 2026 as litigation broadens.
“It continues to be disappointing that a direct competitor would go to such extreme lengths to orchestrate a covert campaign designed to harm our business and avoid competing fairly in the marketplace,” Evolution said in a statement.
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Canadian regulators have issued a warning on prediction markets, stressing that only a limited, tightly controlled form is currently permitted and that sports-related contracts are not allowed. Activity is restricted to regulated investment platforms, with authorities monitoring developments closely amid rising interest. Regulators signaled potential further action, noting concerns about compliance with securities and derivatives laws and the risk of unauthorized offerings, highlighting a far more cautious approach than the rapid expansion seen in the US.
The UK’s Advertising Standards Authority (ASA) has upheld a complaint against SkillOnNet and its Gecko Play brand over a paid Instagram ad, finding it portrayed and encouraged gambling behavior that was socially irresponsible. The regulator concluded the ad risked causing financial, social or emotional harm and breached CAP Code rules on responsibility in gambling marketing. The ASA ordered the ad not to appear again in its current form.
The Michigan Gaming Control Board said it has issued 45 cease-and-desist orders to unregulated online gambling operators since December, including Bet On USA, SlotBunnyCasino and Candyland Casino. The regulator said the operators were offering sports betting or online casino gaming to Michigan players without a state license.
Polymarket has agreed a partnership with Spain’s LaLiga covering the US and Canada, including digital and social content, fan experiences and meet-and-greets with former players. LaLiga said it is the first major European football league to strike this kind of deal with a prediction market operator.
Brazil: The Ministry of Sport, via its National Secretariat for Sports Betting and Economic Development of Sport, has launched an education platform with the National Association of Games and Lotteries to train athletes to spot and prevent match-fixing. The initiative, supported by Sportradar, forms part of Brazil’s national anti-match-fixing policy and is intended to strengthen integrity and transparency in sport.
Netherlands: Legs Eleven has changed several planned Bingo Loco events after warnings from the Dutch Gambling Authority, which said the commercial shows did not qualify for the country’s limited bingo exemption. The bingo nights, including events in Rotterdam and Maastricht, have been replaced with music quizzes after the regulator concluded they were unlicensed games of chance.
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Regulatory reckoning
Touchy subject: Prediction market operators are currently benefiting from an unusually permissive regulatory environment that may not last, suggested the analysts at Jefferies.
Most platforms rely on continued Commodity Futures Trading Commission (CFTC) enforcement, which is notably light-touch, with further risk of adverse legal outcomes likely in 2027.
Jefferies sees that dynamic as inherently fragile.
Stark raving mad: At the heart of the Jefferies analysis is a comparison of the compliance burden faced by licensed OSB and iGaming operators versus that carried by prediction market platforms regulated by the CFTC. The contrast, the analysts argued, is stark.
Mandated safeguards in OSB and iGaming are meaningfully higher, creating potential for negative player outcomes and subsequent regulatory backlash.
The note detailed how licensed sportsbook operators are required to maintain self-exclusion programs, deposit and loss limits, responsible-gambling messaging and formal procedures for handling problem gamblers.
The CFTC currently mandates none of these for prediction market platforms.
Law less: Jefferies documented a series of instances where the CFTC has gone beyond merely having lighter regulations, rather it has actively declined to enforce the rules it does have. These include issuing no-action letters exempting Kalshi and Polymarket from data-retention requirements, voluntarily dismissing its own appeal against Kalshi’s political event contracts, and declining to bring charges in insider trading cases that Kalshi itself flagged to the regulator.
The analysts’ view is unambiguous: the current CFTC’s light-touch approach protects operators, for now.
The implication being that a change of administration or regulatory leadership could rapidly alter the picture.
The Supreme test: Jefferies also detailed a scenario analysis around a potential Supreme Court ruling, which the team believes is likely to arrive in 2027. The analysts identified four distinct legal routes that could produce an adverse outcome for prediction market operators, and they rate three of them as having high or very high probability.
Most significant for sports-betting operators will be the Ohio scenario.
Judge Sarah Morrison of the Southern District of Ohio has already ruled that sports-game outcomes do not directly affect commerce or commodity prices.
This thus permits Ohio’s cease-and-desist order on Kalshi to take effect.
Jefferies believes that if this argument reaches the Supreme Court, at a minimum, SCOTUS would strike down prop bets, over/unders, point spreads, parlays and any other ‘extra’ bets on sports.
Rule of iron: Meanwhile, the analysts consider the California tribal case to be the most ironclad legal obstacle that prediction market operators will likely face.
A ruling requiring geofencing around tribal land is seen as highly probable.
That, they argued, would open the door to a cascade of similar state-level challenges.
Run the risk: Jefferies also flagged the legislative route as a credible risk, particularly post the 2026 midterms. A bipartisan bill to exclude sports and political event contracts from the Commodity Exchange Act has already been introduced in both chambers.
Current prediction market odds favor the Democrats to win the House at around 86% and give a reasonable chance of a Senate win as well at around 49%.
Jefferies views potential legislative action as a risk to keep in mind for 2027.
Win-win: Perhaps counterintuitively, Jefferies framed much of this regulatory uncertainty as ultimately constructive for established OSB operators such as DraftKings and Flutter.
The note argued that both stocks have been disproportionately punished by market fears of prediction market cannibalization that the evidence does not support.
The analysts see both operators as well-positioned regardless of the ultimate direction of prediction legalization.
If prediction becomes illegal, the narrative shifts materially against Kalshi and Polymarket; if it becomes fully legal, the scale of DraftKings and Flutter becomes more apparent.
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Punters revolting
Peasants revolt: The Betting and Gaming Council (BGC) said new polling highlights mounting consumer resistance to proposed affordability checks, with around 65% of bettors unwilling to provide documents such as bank statements or payslips to continue gambling.
The survey, based on more than 2,000 punters, is framed as a warning to regulators that intrusive requirements risk undermining the government’s stated aim of “frictionless” checks.
Rage against the machines: The BGC argued that requiring detailed financial disclosures would be perceived as disproportionate and invasive, particularly for recreational customers, and could materially damage trust in regulated operators.
It also pointed to evidence from pilot schemes suggesting implementation challenges, including inconsistent outcomes and operational friction.
It said these findings contradict the policy’s intended design.
A central concern for the trade body is channelization risk. The BGC warned that imposing document-based affordability checks could accelerate migration to unregulated gambling sites, where there are no consumer protections, affordability safeguards or tax contributions.
Industry stakeholders have linked this to potential revenue leakage for both operators and the wider ecosystem.
This includes horseracing, which relies heavily on betting-derived funding.
Rearguard action: The findings form part of a broader industry pushback against the UK’s post–Gambling Act review reforms. The BGC reiterates its support for targeted, data-led interventions focused on high-risk customers rather than blanket measures.
It urged policymakers to refine the approach to ensure checks remain proportionate, frictionless and effective.
It further warned that failure to do so could have unintended consequences for both consumer protection and the sustainability of the regulated market.
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