The 10 States Taking the Toughest Action Against Prediction Markets
Updated October 6, 2026
Updated October 6, 2026
Prediction markets are expanding rapidly across the United States, but state regulators are pushing back just as quickly.
The biggest fight centers on sports event contracts. Platforms such as Kalshi, Polymarket, Robinhood and Novig operate within the federal derivatives system, while a growing number of states argue that sports contracts should also be subject to state gambling and sports-wagering laws.
How States Are Cracking Down
States are taking prediction-market companies to court over legality.
Regulators are ordering platforms to stop offering certain contracts.
Some companies are limiting products or leaving states entirely.
Platforms are being forced to block users by location.
Lawmakers are passing new rules aimed directly at prediction markets.
Arizona has filed criminal charges tied to prediction-market activity.
States are taking prediction-market companies to court over legality.
Regulators are ordering platforms to stop offering certain contracts.
Some companies are limiting products or leaving states entirely.
Platforms are being forced to block users by location.
Lawmakers are passing new rules aimed directly at prediction markets.
Arizona has filed criminal charges tied to prediction-market activity.
Ohio became the latest state to escalate the fight in October when regulators ordered 10 prediction-market companies to stop offering or facilitating sports event contracts.
Here are the 10 states taking the toughest approach to prediction markets in 2026.
The ranking considers the breadth and severity of each state's actions. It does not necessarily reflect which side is currently winning in court.
Rank | State | What Makes It Stand Out |
|---|---|---|
1 | Nevada | Shut down Kalshi sports markets and won at the Ninth Circuit |
2 | Washington | Court order blocks a broad range of Kalshi markets |
3 | Arizona | Filed criminal charges against Kalshi |
4 | New York | Suing Kalshi, Polymarket, Coinbase and Gemini |
5 | Minnesota | Passed a law making some prediction-market activity a felony |
6 | Michigan | Court restrictions, geofencing and potential $500,000 daily penalties |
7 | Connecticut | Nine cease-and-desist orders and nearly 30 subpoenas |
8 | Ohio | Ordered 10 platforms to stop sports event-contract activity |
9 | Tennessee | Won a major Sixth Circuit ruling against Kalshi |
10 | Utah | Won summary judgment allowing state gambling enforcement |
Nevada has arguably taken the hardest line against prediction markets of any state.
The Nevada Gaming Control Board has been fighting Kalshi since 2025 and has pursued several companies offering event contracts.
Its major actions include:
On August 28, the U.S. Court of Appeals for the Ninth Circuit rejected Kalshi's argument that the sports contracts at issue qualified as federally protected swaps that Nevada could not regulate. The ruling strengthened Nevada's ability to apply its own gaming laws to sports event contracts.
Nevada is particularly important because its victory helped create the current split between federal appeals courts over how sports prediction markets should be regulated.
For more background, see our Kalshi legal status guide.
Washington's crackdown goes further than just sports.
The Washington State Gambling Commission says offering or participating in event-contract prediction markets is not authorized in the state.
Washington Attorney General Nick Brown sued Kalshi in March, and the state later secured a preliminary injunction.
The restrictions cover contracts involving:
Kalshi was also required to implement geofencing controls.
That makes Washington unusual because many other states are focusing mainly on sports contracts. Washington has challenged a much broader part of Kalshi's prediction-market business.
Arizona went further than sending a cease-and-desist letter.
In March, Attorney General Kris Mayes filed a 20-count criminal case against Kalshi.
The charges included allegations tied to:
Kalshi later received federal protection that temporarily stopped Arizona from pursuing the criminal case, so this should not be interpreted as Arizona having successfully removed Kalshi from the market.
However, the attempted use of criminal prosecution makes Arizona one of the most aggressive states in the country.
ATS has covered the case in more detail in our Kalshi vs. Arizona breakdown.
New York is not targeting just one prediction-market company.
The state has pursued multiple major platforms, including:
New York sued Coinbase and Gemini over their prediction-market products in April, followed by separate actions involving Kalshi and Polymarket.
The state's basic position is that these products are effectively gambling and should comply with New York's licensing and consumer-protection framework.
That makes New York one of the broadest state-level offensives against the industry.
Minnesota passed perhaps the most aggressive prediction-market law in the country.
The legislation targets companies involved in operating or supporting certain prediction markets and can reach:
Some violations can be treated as felonies.
The CFTC itself described Minnesota's legislation as one of the most aggressive state attempts to regulate the industry.
There is, however, a major caveat.
A federal judge issued a preliminary injunction in July preventing Minnesota from enforcing the statute against CFTC-registered Designated Contract Markets while litigation continues. That protection currently covers federally regulated exchanges such as Kalshi and Polymarket US.
Minnesota therefore ranks highly because of the severity of the law it passed, not because the state has successfully enforced it against the largest platforms.
Michigan has already translated its prediction-market crackdown into meaningful operating restrictions.
A state court entered a preliminary injunction against Kalshi on September 1 restricting sports-related activity involving Michigan users.
The order includes:
Robinhood also agreed to stop offering new sports event contracts to Michigan customers while its own litigation continues.
That combination makes Michigan significant because state action has already affected which products major platforms can offer to users.
Connecticut has launched one of the broadest industry-wide crackdowns.
In September, the Department of Consumer Protection issued cease-and-desist orders to nine companies:
The state also issued nearly 30 subpoenas connected to its investigation into prediction-market activity.
Connecticut separately sued Kalshi over its sports contracts.
The enforcement is already having practical consequences. ProphetX, Gemini and Webull have since stopped operating prediction-market products in Connecticut following the state's action.
That makes Connecticut one of the clearest examples of state enforcement actually changing platform availability.
Ohio has quickly become one of the most important states in the prediction-market fight.
The state initially pursued Kalshi and threatened the company with a $5 million penalty, a dispute ATS covered earlier this year in our Ohio-Kalshi enforcement breakdown.
Ohio then received a major boost on September 25 when the Sixth Circuit rejected Kalshi's argument that its sports event contracts were swaps protected from state gambling regulation.
Days later, Ohio expanded the crackdown to 10 additional companies:
The companies were told to stop offering or facilitating sports event contracts in Ohio.
That makes Ohio particularly significant because its enforcement is now aimed at much of the prediction-market ecosystem, rather than Kalshi alone.
Tennessee is another state that received a major legal boost from the Sixth Circuit.
Kalshi had previously obtained a federal injunction preventing Tennessee officials from enforcing their sports-wagering rules against the company.
That changed in September.
The Sixth Circuit:
The ruling was decided alongside the Ohio case and is now one of the strongest appellate decisions supporting state authority over sports event contracts.
Utah has not launched the kind of multi-platform sweep seen in Ohio or Connecticut, but it has secured an important court victory.
On August 4, a federal district court granted summary judgment to Utah in its dispute with Kalshi.
The court concluded that the Commodity Exchange Act does not prevent Utah from enforcing its anti-gambling laws against Kalshi. (law.justia.com)
That is significant because the court addressed the core federal-preemption question directly rather than simply issuing a temporary procedural ruling.
Kalshi has challenged the result, so the legal fight is not necessarily over. But Utah currently has one of the clearer state-level victories on the merits.
The top 10 does not cover every state that has taken action.
Other notable states include:
ATS has a full breakdown of the Kalshi Supreme Court fight.
The central disagreement is relatively simple.
Prediction-market companies argue that their event contracts are financial products traded through federally regulated exchanges under the Commodity Exchange Act.
State regulators argue that some of those products — particularly sports contracts — function much like sports wagering.
That creates a clash between two regulatory systems.
State-regulated sportsbooks normally face rules covering:
Prediction markets operating through federally regulated exchanges follow a different framework.
The key legal question is whether federal commodities regulation prevents states from applying those gambling laws to event contracts.
Courts still do not agree on the answer.
Federal appeals courts have reached different conclusions about the extent of state authority.
The major decisions include:
New Jersey has already asked the Supreme Court to intervene, making the dispute one of the most important regulatory questions facing the U.S. prediction-market industry.
For the latest state-by-state position, see our full Kalshi legal status guide.
State enforcement is no longer primarily a Kalshi story.
Recent actions show how quickly the scope has widened:
Regulators are also increasingly targeting more than the exchanges themselves. Enforcement can reach brokers, distributors and other companies helping consumers access event contracts.
For users, the result is an increasingly complicated patchwork.
A prediction-market platform may operate nationally under federal regulation while still facing:
Unless the Supreme Court, Congress or federal regulators provide a clearer nationwide answer, that state-by-state patchwork is likely to remain one of the defining prediction-market stories of 2026.
