The US prediction-markets sector faced conflicting court rulings and its largest acquisition to date as Kalshi lost ground in New York while IG Group announced a $1.3bn deal for Underdog.
Courts split on federal jurisdiction
The Commodity Futures Trading Commission won an injunction blocking Minnesota's law banning prediction markets, which took effect on 1 August. The judge ruled that some event contracts fall under federal jurisdiction. A day later, a Wisconsin court denied a similar CFTC request, questioning whether sports contracts are governed by federal law at all.
Kalshi lost two motions in New York, prompting Attorney General Letitia James to file suit alleging the company operates illegal gambling. The suit seeks to shut down operations in the state, recover revenues and impose fines. Kalshi immediately removed the case to federal court, citing CFTC jurisdiction.
The Sixth Circuit Court of Appeals cast doubt on Kalshi's arguments in the Ohio and Tennessee dispute. Judges said they were not convinced Congress intended to place sports contracts under federal jurisdiction. A ruling is expected in several months. If it goes against Kalshi, it would conflict with an earlier decision in New Jersey, raising the odds the matter reaches the Supreme Court.
IG Group acquires Underdog
IG Group is acquiring Underdog for $1.3bn. Underdog entered the prediction-contracts market less than a year ago and generated $466m in net revenue over the twelve months to June 2026. According to IG Group, Underdog ranks third in the US by trading volume. IG Group plans to expand the platform beyond sports into finance, crypto, politics and culture.
Robinhood reported almost two million clients traded prediction contracts in the second quarter. Revenue and volumes rose roughly 50% from the previous quarter. Coinbase also doubled event-contract revenue and is preparing to launch combo bets covering multiple events in a single trade.
