Key takeaways

• Letters: At least 11 states have sent prediction markets cease-and-desist letters or orders over sports contracts. The newest came from Missouri on September 18, 2026 and Ohio on October 2, 2026.

• Lawsuits: Attorneys general in Massachusetts, Michigan, Washington, Wisconsin, Rhode Island, New Mexico, Kentucky, New York and Connecticut have sued platforms in state court, and Nevada's Gaming Control Board has won state-court injunctions against Kalshi, Polymarket and Coinbase.

• Ban by statute: Minnesota made running a prediction market a felony in 2026. A federal judge has blocked enforcement against CFTC-registered platforms since July 27, 2026.

• Appeals courts: The Third Circuit sided with Kalshi against New Jersey. The Ninth Circuit (Nevada) and the Sixth Circuit (Ohio and Tennessee) sided with the states.

• Supreme Court: Three petitions are pending, Nos. 26-299, 26-338 and 26-344, with responses due November 9, 13 and 16, 2026.

State actions against prediction markets as of October 18, 2026

States treat sports event contracts as unlicensed sports betting under their own gambling laws. The platforms argue the contracts are swaps listed on CFTC-designated contract markets, so the Commodity Exchange Act preempts state law. The state guides cover each state's full betting law.

Every state action, at a glance

Cease-and-desist letters

New Jersey's Division of Gaming Enforcement wrote to Kalshi and Robinhood on March 27, 2025, and Kalshi sued the next day. Ohio's Casino Control Commission followed on March 31, 2025, Illinois on April 1 and Maryland on April 7, and Illinois added Polymarket to its list on January 27, 2026. Montana ordered Kalshi to stop in March 2025 and April 2026, then agreed on September 17, 2026 to hold off while Kalshi seeks further review of the Ninth Circuit's Nevada ruling. Tennessee's Sports Wagering Council wrote to Kalshi, Polymarket and Crypto.com on January 9, 2026.

Connecticut's Department of Consumer Protection sent nine orders in the week of September 8, 2026, which the governor announced on September 10. They went to Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini and Underdog Predict, and they ordered each platform to let Connecticut customers withdraw their funds. Novig is operated by Ludlow Exchange, LLC, which the CFTC designated a contract market in June 2026.

Missouri Attorney General Catherine Hanaway announced six letters on September 18, 2026, to Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood. Each gave 30 days to stop or get a Missouri Gaming Commission license, which put the Kalshi and Novig deadlines at October 16 and 17. On October 16, Ludlow Exchange sued Hanaway and two commission officials in the Eastern District of Missouri (No. 4:26-cv-01780), and Crypto.com's derivatives exchange filed its own suit in the Western District (No. 4:26-cv-00969).

Ohio's October 2 letters went to Polymarket, Novig, Underdog, Coinbase, ProphetX, Robinhood, Gemini Titan, Webull, Plus500US and Moomoo, with an October 16 deadline to confirm in writing that they had stopped. Kalshi, already in court with the state, got no letter and faces a separate $5 million fine notice served April 14, 2026. News 5 Cleveland reported that most platforms were still operating at the close of business on the deadline day, and Attorney General Andy Wilson said the state would force them into compliance.

State lawsuits

Massachusetts Attorney General Andrea Joy Campbell filed the first state suit against Kalshi on September 12, 2025. A Suffolk Superior Court judge granted an injunction in January 2026, but the Appeals Court stayed it on February 17. The Supreme Judicial Court heard argument on May 4, 2026 and hasn't ruled.

Nevada's Gaming Control Board won state-court injunctions against Kalshi on April 28, 2026 and Polymarket US on May 29, and a separate order bars Coinbase. In Michigan, an Ingham County judge signed an injunction on September 1, 2026 with a $500,000 daily fine for failing to geofence. In Washington, a King County judge enjoined Kalshi on July 20, 2026.

Wisconsin (April 23, 2026), Rhode Island (May 21), New Mexico (June 4) and Kentucky (June 17) all filed in state court, and the platforms removed each case to federal court, where they're still waiting on remand motions or stays. New York Attorney General Letitia James sued Coinbase and Gemini on April 21, Kalshi on July 31 and Polymarket US on September 24, 2026. Connecticut sued Kalshi on August 26, 2026.

The CFTC and the Justice Department sued Kentucky on June 23, 2026 (E.D. Ky. No. 3:26-cv-00049). On October 5, Judge S. Chad Meredith canceled the October 9 argument and ordered supplemental briefing, so there's no ruling yet. The CFTC had already sued Arizona, Connecticut, Illinois, Minnesota, New Mexico, New York and Wisconsin.

States that banned prediction markets by statute

Minnesota is the only state with a law that bans prediction markets outright. Under the law, signed in May 2026, it's a felony to operate or advertise a prediction market or to supply one with data, geolocation or payments, and it was to take effect August 1. Attorney General Keith Ellison defended the law in court, and Judge Katherine Menendez enjoined enforcement against CFTC-designated contract markets on July 27, 2026, in suits by the United States, Kalshi and Polymarket US. The cases are in pretrial proceedings, and the injunction hasn't been lifted.

Kentucky passed a narrower law: HB 904 (effective July 15, 2026) bars licensed tracks, sportsbooks and fantasy operators from offering or partnering with prediction markets.

Federal court rulings by circuit

• Third Circuit (New Jersey, Pennsylvania, Delaware): Ruled 2 to 1 for Kalshi on April 6, 2026 in KalshiEX v. Flaherty. The majority held Kalshi had a reasonable chance of winning on preemption.

• Ninth Circuit (Nevada and eight other states): Ruled for Nevada on August 28, 2026 in KalshiEX v. Assad (No. 25-7516), and against Crypto.com (No. 25-7187) and Robinhood (No. 25-7831) the same day. Kalshi petitioned for rehearing en banc on September 9, and the court hasn't ruled on it.

• Sixth Circuit (Ohio, Tennessee, Kentucky, Michigan): Held on September 25, 2026 in KalshiEX v. Schuler (Nos. 26-3196 and 26-5235) that sports contracts likely aren't swaps and that federal law likely doesn't preempt state gambling law. Kalshi asked the full court to rehear the case on October 13.

• Fourth Circuit (Maryland and four other states): Heard Kalshi's Maryland appeal on May 7, 2026 and hasn't ruled.

• Second Circuit (New York, Connecticut): Will hear Kalshi's New York and Connecticut appeals and Coinbase's Connecticut appeal in tandem.

• Seventh Circuit (Wisconsin, Illinois, Indiana): Reviewing a July 29, 2026 ruling that denied the CFTC an injunction against Wisconsin. On October 2, a district judge in Illinois partly enjoined state enforcement against Kalshi and Coinbase.

• Eighth Circuit (Iowa, Minnesota, Missouri and others): Its district courts split, with Minnesota's ban enjoined and Kalshi denied an injunction against Iowa on September 8.

• Tenth Circuit (Utah and others): A district judge granted Utah summary judgment against Kalshi on August 4, 2026, and the appeals court denied Kalshi an injunction pending appeal on September 8.

The Supreme Court petitions

New Jersey asked the Court to review the Third Circuit ruling in Flaherty v. KalshiEX, No. 26-299, docketed September 8, 2026. Kalshi's response is due November 9. Ohio and other states, 145 tribes, the NFL and gaming regulators filed amicus briefs between October 2 and 8.

Robinhood and Crypto.com appealed the Ninth Circuit's Nevada rulings. Robinhood filed No. 26-338 on September 10, and Nevada's response is due November 13. Crypto.com's derivatives exchange filed No. 26-344 on September 11, with Nevada's response due November 16. The Court hasn't said whether it will hear any of the three.

FAQ

Which states have sent prediction markets cease-and-desist letters?

New Jersey, Ohio, Maryland, Illinois, Montana, Arizona, New York, Connecticut, Tennessee, Nevada and Missouri sent letters or orders over sports contracts, and Washington's Gambling Commission issued a public notice.

Has any state sued Kalshi or Polymarket?

Yes. Kalshi faces state suits in Massachusetts, Nevada, Michigan, Washington, Wisconsin, Rhode Island, New Mexico, Kentucky, New York and Connecticut. Polymarket is a defendant in Nevada, Wisconsin, Rhode Island, Kentucky and New York.

Has a court decided whether prediction markets are gambling?

Appeals courts disagree. The Third Circuit gave Kalshi a reasonable chance of winning on preemption, while the Sixth and Ninth Circuits held that sports contracts likely aren't swaps and that states can apply their gambling laws. Three Supreme Court petitions ask the Court to settle the split.

Can a state ban prediction markets outright?

Minnesota is the only state to pass one, and a federal judge has blocked it for CFTC-designated contract markets while the case goes forward.

You must be 21 or older to bet in most states. Gamble responsibly. If gambling stops being fun, call or text the national helpline at 1-800-MY-RESET (ncpgambling.org).