Gambling Insider Relaunches as Prediction Markets Shake Up Industry

Today, Jan. 5, 2026, a new version of Gambling Insider launches, with fresh focus on the gambling industry in the US and other English-speaking nations.

As the calendar flips to a new year, prediction markets are dominating the conversation in industry circles. The financial trading platforms – thinly-veiled sports betting apps, to many – are impacting virtually every aspect of the business.

While companies like Kalshi and Polymarket, with the blessing of the Commodity Futures Trading Commission, boldly encroach upon the sports betting space once owned by state-regulated operators, battles play out in courtrooms across the country, and debate rages over what some perceive as the carelessness with which these prediction markets do business.

Coverage of prediction markets will be representative of how the industry as a whole is covered. Reporting will focus on legislation and legal matters, the intersection of gambling with finance and crypto, people and culture, and responsible gaming, along with investigative journalism, business analysis, and deep dives into data.

This industry is an impossible one to predict, but it is compelling to follow. Readers are encouraged to make the new iteration of Gambling Insider a destination for gambling news.

Prediction Markets’ Foray Into Sports Rankling States

Prediction markets are not new, but their recent move into sports is causing angst.

The event contracts that prediction markets offer are designed, theoretically at least, as hedges against certain economic conditions. Event contracts tied to interest rates, the price of Bitcoin, or which AI company will have the top ranked LLM at the end of the year can be used as legitimate financial instruments. That is a harder case to make when it comes to whether over 48.5 points will be scored in the Rose Bowl.

Sports-event contracts comprise around 90% of the trading volume on Kalshi, and the US beta version of Polymarket offers only sports, with the promise of crypto, tech, politics and more to come soon.

Prediction markets’ heavy lean into sports is not sitting well with states, many of which have taken legal action and are threatening licensed sports betting operators with serious regulatory sanctions should they cross the line into the emerging but gray area.

With massive investments valuing Polymarket and Kalshi in the tens of billions, and financial behemoths like Robinhood and Crypto.com getting into prediction markets in big ways, there is bullishness that federal preemption will win out, and that these companies will be able to keep doing what they are doing wherever they feel like doing it.

Sportsbooks and DFS Operators Enter Prediction Market Space

FanDuel, DraftKings, PrizePicks and others are not sitting idly by while Kalshi, Polymarket, Robinhood and similar platforms eat into their market share in regulated states and offer sports bets in states where it is not even legal. Major sportsbook and DFS operators are moving forward with their own prediction market plans, despite regulatory threats.

This is amounting to a game of chicken between operators and states. There are questions over whether sportsbooks are really willing to risk their licenses as they jump into prediction markets, and whether states would actually strip licenses from their top revenue producers.

Prediction markets also raise questions about efforts to legalize sports betting in more states. Expansion appears to have plateaued, with legalization in California and Texas still a long way off. Meanwhile, FanDuel and DraftKings have pulled out of the American Gaming Association, and these operators believe there may be better ways to invest their money than in more futile lobbying efforts.

Will New Gambling Tax Rule Push Bettors to Prediction Markets?

A provision tucked into the One Big Beautiful Bill Act, signed into law by President Trump on July 4, caps at 90% the losses gamblers can claim to offset winnings. Some industry observers believe the change will have a massively adverse effect on regulated sportsbooks, as it will force their biggest customers toward prediction markets.

For players, the impact of the new tax rule could be enormous. Not only does it make gambling as a career untenable, it means that even recreational gamblers may to pay taxes on phantom income – break even gambling, and still owe the government money.

“Eighty percent of the handle in the regulated sports betting market is generated by professional syndicate play and whale VIP play,” American Bettors’ Voice board member Adam Robinson said last month. “I believe this tax loss provision is going to incentivize those who are responsible for 80% of regulated handle to look elsewhere.”

While it is uncertain how the IRS will treat sports event contacts, “elsewhere” means prediction markets for many gamblers, a notion of which FanDuel and DraftKings are well aware.

Impetus for iGaming Legalization?

As fast and as big as sports betting has grown in the US since PASPA was overturned seven years ago, it is a fraction of iGaming’s potential. While there is plenty of trepidation about the continued expansion of gambling, the industry covets the massive profits online casinos would unlock.

It seems to be just a matter of time until casino-style games pop up on prediction markets. Many industry observers insist it is foolhardy to believe otherwise.

Such a development could motivate states to advance iGaming legislation. If online casino gambling shows up on tacitly federally-endorsed platforms, states may decide they should get ahead of it so they can regulate and tax it themselves.

Irresponsible Gaming Concerns

To responsible gaming advocates, prediction markets are serial violators.

Among the violations cited are selling gambling as investing and a means to build wealth, circumventing standard consumer-protection regulations imposed by states such as KYC and self-exclusion tools, offering insider trading and manipulable markets, and partnering with questionable influencers, such as fake media accounts and those with anti-Semitic leanings.

These are major reasons for the pushback against prediction markets. For now, however, Kalshi, Polymarket and similar platforms remain undeterred.

The gambling environment, largely shaped by prediction markets, is expected to change in 2026, though the direction of that change is uncertain. It will be closely watched as the industry continues to evolve.