Las Vegas
It’s been a rough summer on the Strip.
In addition to sizzling 115-degree days, Las Vegas’ famous resorts and casinos are plodding through a tourism slump. This year, a new and possibly existential threat has emerged: the meteoric rise of prediction markets.
Prediction platforms like Kalshi and Polymarket – where users wager on sports, politics, culture, and the weather – have transformed from a niche space for superfans to a seemingly ubiquitous multibillion-dollar industry.
With the Trump administration’s blessing, these startups are structured as financial markets for trading, not casinos or sportsbooks for gambling.
Under this system, prediction companies bypass state gaming boards and instead get licensed by an obscure federal commodity regulator to offer “event contracts.” This setup also means they aren’t taxed like gambling, which generated nearly $18 billion in revenue for states last year.
Analysts blame Vegas’ slowdown on rising consumer costs, not prediction sites. But the casinos aren’t taking chances. They mobilized for “all-out war,” and have now become a driving force in the nationwide fight to rein in prediction markets, according to nearly 20 sources who spoke with CNN.
“A couple nerds came up with this idea to avoid paying taxes,” says Derek Stevens, who owns three Vegas casinos and Circa Sports, with sportsbooks in seven states. “Just because they’re shrewd doesn’t mean they should be exempt from the law. These are thieves. They’re pirates. They’re marauders.”
The anti-prediction campaign picked up momentum this summer.
A casino-backed lawsuit secured the most consequential courtroom victory yet for prediction opponents. On Friday, the Ninth Circuit Court of Appeals unanimously ruled that states can regulate prediction platforms as gambling, siding with Nevada officials and an association of Vegas casinos.
Earlier this summer, in a flurry of rulings against prediction sites from Connecticut to Wisconsin, federal judges cited prior decisions from the Nevada case. And in Congress, lawmakers filed five new bipartisan bills this summer to limit the industry, adding to the dozen-plus pending proposals.
Some prediction proponents say casinos are following a losing strategy that they deployed against past innovations and new outlets for gambling, like tribal gaming and online poker.
“This is the game that’s played, and I’ve been part of that game for 30 years,” says former Nevada Sen. Dean Heller, a Republican who is now a paid adviser to Kalshi. “This is no different than what we’ve seen. It’s how gaming responds to competition. They don’t like it. They want to have a monopoly.”
Other prediction allies – like Kalshi employees who frequently light up social media – have tried to flatten the narrative by claiming anyone opposing them is doing the bidding of the casino lobby. The well-funded gaming industry has spent over $3.3 million on federal lobbying this year.
But they’re hardly the only ones pushing for more regulation. So are 44 of 50 state attorneys general, dozens of Indian tribes, consumer advocates, addiction experts, and an increasingly bipartisan contingent on Capitol Hill.
The states are worried about losing revenue from gaming taxes that fund schools and highways. A Kalshi spokesperson said it pays state taxes like all companies and noted that North Carolina enacted a 6% tax on prediction platforms that “respects federal law while funding critical state services.”
Polymarket declined to comment for this story. In response to Stevens, a source close to the company tells CNN, “If the gambling lobby is resorting to name-calling, that tells you this is really starting to hurt their wallets.”
CNN has a partnership with Kalshi and uses its data to cover major events. Editorial employees aren’t allowed to participate in prediction markets.
At this point, prediction sites aren’t killing casinos.
As Kalshi often notes, the American Gaming Association, the lobbying group for most major land-based casinos, boasts that 2025 was the sixth consecutive year of “record-breaking revenue” for its members. Experts say one way they survived the Vegas slump was by catering to wealthier VIPs.
Still, casinos are treating prediction sites like a dire threat because of what might come next.
They remember in 2024, when Kalshi’s lawyers were fighting in court to legalize election markets, they repeatedly told federal judges they believed Congress clearly intended to prohibit sports-related prediction markets. (Judges, including in the Ninth Circuit, have noted this discrepancy, too.)
Kalshi won that election lawsuit and soon started offering markets on the 2024 presidential race. They listed their first sports markets in January 2025, days after President Donald Trump’s inauguration.
Trading skyrocketed this year, especially for sports. According to TickerTracker, about 78% of Kalshi’s volume this month, roughly $26 billion, has come from sports and parlays, an all-or nothing bundle of bets that are popular with sports. The figure was 99% for Polymarket’s US platform, with more than $3 billion in volume.
The major Vegas casinos, even those without sportsbooks, are unified against sports on prediction sites. But sportsbooks are taking the most heat and feeling the most pain so far.
Stevens leaned heavily into sports in 2020 when opening his flagship Circa Resort and Casino, which claims to offer the “largest sports-betting experience in the world.” There’s an enormous 78-million-pixel screen overlooking the indoor sportsbook, and a 143-foot screen at its outdoor “Stadium Swim” pavilion that hosts watch-parties for major sporting events.
He tells CNN the land-based and online sportsbooks under Circa Sports have seen a 35% drop this year in sports handle, or total amount wagered, which he attributes to prediction markets.
Online sportsbook giants like DraftKings and FanDuel have seen their stock values fall sharply in the last year. Shares for FanDuel’s parent company, Flutter Entertainment, dropped a whopping 68% since last August, while DraftKings shares are down 49%.
Companies insist competition from prediction sites isn’t “cannibalizing” their customer base. Still, several financial analysts have concluded that the prediction frenzy, with its sleek mobile apps and easy-to-understand odds, are driving the stock drops.
“The stocks also really took a negative hit when combos, which are pretty similar to parlays, were introduced for prediction markets,” says Barry Jonas, a senior financial analyst at Truist who follows the gambling industry.
Both companies broke ranks from the casino industry by making their own prediction apps, to capture users in states where sports-betting is illegal.
Industry insiders and state regulators tell CNN they’re worried Kalshi might expand into markets predicting the outcome at a roulette table or a hand of blackjack, or even offer digital slot machines powered by prediction algorithms on the backend. A federal judge in Connecticut raised some of these possibilities in a ruling against Kalshi this month. (Kalshi’s lawyers have said those markets wouldn’t be permitted under federal law.)
There are dozens of cases across the country surrounding the legal status of prediction sites, and experts believe the matter will eventually be decided by the Supreme Court. But before it gets there, everyone is watching Nevada.
The lawsuits started flying early here in the Silver State.
Kalshi sued Nevada regulators in March 2025, and soon secured a court order blocking them from enforcing state gaming laws against the company.
After the setback, Nevada retained new counsel from the white-shoe firm Mayer Brown, including lawyers who have argued dozens of cases at the Supreme Court. The Nevada Resorts Association, which represents casinos across the state, also intervened as a party in this case and related cases.
The beefed-up legal teams brought fresh arguments in the cases, and the judge surprisingly reversed his earlier decision, paving the way for Nevada to shut down Kalshi in the state. Nevada later secured favorable rulings in prediction cases involving Polymarket, Robinhood and Coinbase.
“The casinos’ intervention, coupled with the state’s engagement of top-level outside counsel, totally changed the fortunes,” says Daniel Wallach, a gaming lawyer who tracks these cases and is a skeptic of the prediction markets’ arguments. “That’s the only time a state rescued victory from the jaws of defeat. No state has come back off the mat like Nevada.”
Kalshi and the other companies appealed their losses to the Ninth Circuit . The federal appeals panel, with three Trump appointees, handed a resounding 3-0 win to Nevada and the casinos in a 50-page ruling Friday.
“Placing sports bets, even when called by another name, is still gambling,” the panel wrote, adding, “Kalshi’s attempts to distinguish its sports event contracts from sportsbooks betting are unpersuasive” and “disingenuous.”
This was also the most bipartisan anti-prediction legal effort in the country.
Nevada’s top gaming regulator, Mike Dreitzer, was appointed by GOP Gov. Joe Lombardo. With his support, Dreitzer’s office has worked hand-in-hand on the lawsuits with Nevada’s Democratic attorney general, Aaron Ford. (As an added twist, Ford is challenging Lombardo this November in a competitive governor’s race.)
“I’ve used the term ‘existential,’ and I mean it,” Dreitzer, who chairs the Nevada Gaming Control Board, tells CNN. “We have genuine concerns that all of the protections that are needed are not available. They’re talked about a lot. They’re tweeted about a lot. But the reality is – show your work.”
There’s “open invitation” for prediction companies to come in, negotiate, find a way to get licensed and “follow the rules like everybody else,” he says.
Polymarket declined to comment about potential contacts with regulators. Kalshi’s general counsel Rick Heaslip tells CNN there have been some contacts, but he claims regulators were acting in bad faith.
“While they say they’re willing to come to the table, that doesn’t really reflect their actions,” Heaslip says. “We’re willing to match nearly all of Nevada’s consumer protection laws… and also, we’re accountable to a federal regulator. State laws are not really designed to handle these issues.”
A dizzying array of new lobbying groups have also popped up on both sides.
The gambling industry is far more entrenched in Washington and fought major legislative battles before. The American Gaming Association (AGA) was founded in 1994, before the CEOs of Polymarket and Kalshi were born.
The largest casinos and the AGA have spent at least $3.3 million on federal lobbying this year, according to federal disclosures. As part of the AGA’s push to get prediction markets out of sports, the group has communicated with “hundreds” of congressional offices this year, a spokesperson tells CNN.
“There are longstanding connections and established rapports with people across the aisle in both chambers,” a gaming industry source says.
The AGA brought on former New Jersey Gov. Chris Christie last year. A different anti-prediction group, “Gambling is Not Investing,” hired former Trump adviser Mick Mulvaney. Yet another group, “FairPredicts,” has taken aim at Kalshi and Polymarket in particular, but its backing is unclear.
Federal records indicate that the largest prediction companies have spent more on lobbying Congress this year than the casinos – at least $5.6 million, though some of the companies deal with other matters, like cryptocurrency.
The “Coalition for Prediction Markets,” supported by many of the companies, is led by former Democratic Rep. Sean Patrick Maloney. The Kalshi-backed “Americans for Fair Markets” nabbed former Trump aide Taylor Budowich.
Christie, Mulvaney, and Maloney have become frequent guests this year on CNBC and Bloomberg programs, pushing their side’s talking points.
There’s also the Native American tribes, with their own casino interests.
Court-watchers who track prediction cases tell CNN they believe detailed legal briefs from the tribes’ seasoned gaming attorneys helped influence recent rulings against the companies.
Factions in the broader casino industry that didn’t always align are also now cooperating more on their Capitol Hill efforts, according to James Siva, vice chair of the Morongo Band of Mission Indians, who sits on the board for the AGA and Indian Gaming Association.
“In the past, those two groups have been quite antagonistic to each other,” Siva says. “But on this issue, we are walking together in lockstep. I haven’t ever seen this kind of unity between commercial gaming and tribal gaming.”
Their unified mission is to get sports out of prediction markets.
They don’t have a problem, they insist, with prediction sites continuing to offer wagers on elections, entertainment, and commodities like oil and gold that can be used to hedge risk. (That, after all, is part of the legal basis for why prediction markets should be regulated by the federal government.)
But they’re incensed that, under Trump, the Commodity Futures Trading Commission (CFTC), which is tasked with regulating the prediction markets, has aligned with the industry on nearly every topic. (The Trump family is financially tied to the prediction industry.)
“This is an all-out war,” Siva said. “But it’s also an uneven battlefield, because prediction markets have been given the green light by the administration.”
CFTC chair Michael Selig, a Trump appointee, staunchly backs the prediction markets’ view that they are distinct from gambling.
Under his watch, the CFTC has taken action in lawsuits across the country to support prediction sites, including in Nevada, arguing that state gaming laws don’t apply. The Ninth Circuit on Friday rejected many of the CFTC’s core arguments, saying: “The CFTC is not a national gambling regulator.”
Many of the states – 44 in total – urged the CFTC in July to crack down on prediction sites, calling them “a new form of casino.” AGA lobbyists worked behind the scenes to connect state attorneys general, while rallying support, the New York Times reported Thursday. Selig largely rebuffed their concerns and is currently finalizing new industry-friendly regulations.
The CFTC began 2026 with just 535 employees – its smallest footprint in a decade – and Selig has been the sole commissioner on the five-member panel since December.
“We think Selig is a joke,” said Stevens, the Circa owner. “I have a hard time believing tens of thousands of people that work for state gaming boards can be replaced by the CFTC. It’s laughable to think the CFTC could control this.”
Asked about those comments, CFTC spokeswoman Brooke Nethercott said the agency “has the surveillance tools and staff in place to not only police prediction markets, but the global $1.2 quadrillion in derivatives markets overall.” (The CFTC also oversees commodity futures and other swaps.)
Heaslip, Kalshi’s top lawyer, said the company believes “there are enough sports to go around” and that the casinos “can continue to have their sportsbooks, and we can continue to have sports prediction markets.”
Two sportsbooks went their own way, venturing into the prediction space.
FanDuel and DraftKings still run their popular online sportsbooks, but only in the roughly 25 states where they hold licenses. So, they also launched CFTC-regulated prediction apps covering the remaining states – exploiting what critics say is the same loophole used by Kalshi and Polymarket.
This triggered a realignment within the gaming industry, and put them at odds with Nevada regulators, too. Both companies left the AGA last year.
“That was a big paradigm shift,” one Vegas-based financial analyst told CNN, on condition of anonymity. “To turn their backs on Nevada, the gaming capital of the United States, and say, ‘we don’t need Las Vegas,’ was a really huge thing for the industry here. We’ve never really seen that before.”
It’s not clear whether their foray into predictions has paid off. Not only are their stocks down, but at least one financial analyst recently downgraded its DraftKings outlook from “buy” to “hold.”
DraftKings did not comment for this story. And FanDuel has made clear that its main priority is to grow its state-regulated sportsbooks.
A FanDuel spokesperson said the company believes sportsbooks offer a “superior” product with strong consumer protections, but “FanDuel Predicts allow us to reach customers in states where sports betting remains illegal.”
