# US prediction market regulatory and legal disputes

> Live situation record from CLSTR: https://clstr.news/situations/us-prediction-market-regulatory-and-legal-disputes
> Updated: 2026-08-16T03:02:39.000Z. Sources: 10. Developments: 2.

Novig, operating through the CFTC-designated Ludlow Exchange, LLC, has established a responsible trading framework. This framework includes a nationwide minimum age requirement of 21 with identity verification, deposit and loss limits, cooling-off periods, and self-exclusion options. The exchange also implemented marketing standards and risk-based behavioral monitoring to prevent potential harm.

Simultaneously, prediction market operators including Novig, Kalshi, and Polymarket are engaged in legal disputes regarding whether sports-based prediction markets should be regulated as commodities or as gambling. Operators argue their platforms provide federally supervised derivatives under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which could preempt state-level gambling laws.

Novig has filed federal legal proceedings against officials in Wisconsin, New York, Massachusetts, and Washington to block the enforcement of state gambling regulations. In New York, Kalshi is facing legal challenges and potential penalties as the state alleges its offerings constitute sports gambling. While some states like Texas and California maintain operations under CFTC oversight, the regulatory landscape remains complex due to tribal litigation and ongoing studies of state gambling law loopholes.

Recent developments indicate the conflict is intensifying as operators seek to preemptively block state-level enforcement. Novig has expanded its legal actions to include officials in New Mexico alongside its existing suits in Wisconsin, Massachusetts, New York, and Washington. Meanwhile, state regulators and tribal groups in California and Connecticut continue to challenge these platforms. The outcome of these disputes, which may reach the Supreme Court, will likely determine the future legality and operational scope of sports-related event contracts in the United States.

## Timeline

### 2026-08-16: Prediction markets face legal battles over US regulatory jurisdiction

U.S. prediction market operators are engaged in a legal battle with state regulators over whether sports-based event contracts are federally regulated derivatives or illegal state-level gambling.

8 sources. https://clstr.news/cluster/novig-sues-wisconsin-officials-over-prediction-market-regulations

### 2026-08-13: Novig implements responsible trading framework for regulated prediction markets

Novig has integrated a responsible trading framework into its CFTC-regulated rulebook, introducing a 21+ age requirement, loss limits, and exchange-led behavioral monitoring.

2 sources. https://clstr.news/cluster/novig-implements-responsible-trading-framework-for-regulated-prediction-markets

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Cite as: US prediction market regulatory and legal disputes. CLSTR, https://clstr.news/situations/us-prediction-market-regulatory-and-legal-disputes