Polymarket achieved a key federal approval that opens its regulated return to the U.S. market, while Kalshi suffered a judicial setback in Nevada that restricts part of its contracts. The divergent outcomes arrive amid scrutiny of whether prediction markets are financial derivatives overseen by federal regulators or wagers governed by state laws.
The Commodity Futures Trading Commission (CFTC) granted Polymarket an Amended Order of Designation, allowing it to operate as a regulated exchange in the U.S. The company consolidated that path through the acquisition of QCX LLC, an entity already licensed as an exchange and clearinghouse regulated by the CFTC, and the regulator had issued in Sept. 2025 a no-action letter that eased reporting and registration obligations for event contracts.
Polymarket was sanctioned in 2022 with a fine of $1.4 million and had its service restricted to U.S. customers; the new designation seeks to reverse that exclusion and allow the platform to offer event contracts through regulated intermediaries and brokers. Support from institutional actors is notable: Intercontinental Exchange (ICE) committed up to $2 billion in investment, valuing Polymarket at $8 billion, with mentions of potential valuations near $15 billion.
This combination of an operational license and capital positions Polymarket to integrate with commercial and financial partners exploring uses in finance and entertainment.
Polymarket: federal designation and regulated re-entry
That same day, U.S. District Judge Andrew Gordon dissolved an injunction that had protected Kalshi from state regulators, thereby enabling the enforcement of a cease-and-desist order on sports and political contracts. The court held that Kalshi’s position “upsets decades of federalism regarding gaming regulation,” and allowed Nevada to treat those contracts as wagers subject to state licensing.
Kalshi faces challenges on multiple fronts: states such as Maryland denied similar protective requests, tribal leaders in California filed challenges, and the company announced plans to appeal to the Ninth Circuit. From a commercial standpoint, the company had secured $1 billion in a round that valued it at $11 billion, after a prior Series D of $300 million that valued it at $5 billion; additionally, its annualized trading volume reached $50 billion in 2025.
The central dispute is whether federal regulation by the CFTC preempts state authority over gambling or whether states can apply their laws independently.
The contrast highlights a structural tension: the CFTC perceives prediction markets as price-discovery mechanisms and financial derivatives, while state regulators view them through the lens of gambling regulation and taxation.
Firms and platforms have already sought partnerships with mainstream ecosystem players — including retail brokers and sports leagues — and financial information providers have begun integrating market probabilities into their tools, pushing toward commercial normalization despite the fragmented legal framework.
