Travis Pham

Associate Editor

Loyola University Chicago School of Law, JD 2027

The Super Bowl remains the most watched sporting event in the United States, drawing billions in legal and illegal wagers each February. In recent years, a new form of wagering known as prediction markets has emerged, allowing users to trade on event outcomes in ways that resemble both sports betting and financial derivatives. These trading platforms raise compliance challenges because they intersect with both federal derivatives regulation and state gambling laws. At the same time, the NFL has taken their own stance, which is to restrict prediction markets from advertising around the Super Bowl. As a result, prediction markets tied to the Super Bowl exist in a regulatory gray area that demands clearer oversight to protect consumers and legal betting markets.

What are “prediction markets” and why do they matter for the Super Bowl?

Prediction markets are platforms where users place bets based on events they think will happen in the future. Unlike traditional sportsbooks, these markets often operate under a regulatory model governed by the Commodity Futures Trading Commission (CFTC) rather than state gambling laws. Platforms will offer “event contracts” that allow participants to take positions on real-world outcomes.  Kalshi, for example, is an exchange platform that operates as a designated contract market and lists events that allow users to take positions on whether a specified outcome will occur. Users can trade on questions ranging from “When will the government be fully funded?” to “what will be the highest temperature in Chicago today?” These contracts function much like financial derivatives, with price fluctuating based on market demand and perceived probability – and yes, even on who will win the Super Bowl.

The companies behind these markets argue that their products should be regulated by federal law, not state gambling statutes. That position rests on the claim that prediction markets aggregate information and sentiment rather than constituting pure sports gambling. Regulators, courts, and industry stakeholders, including the NFL, have sharply disagreed on whether these products are essentially sports betting. This disagreement is at the heart of ongoing compliance disputes and much of the regulatory uncertainty surrounding the platforms.

Why don’t Kalshi and other platforms stick to non-sports events?

It’s true that the 19 federal lawsuits against Kalshi were primarily prompted by the company’s engagement in sports-related markets, which constitutes an activity similar to sports betting and is regulated on a state-by-state basis. So why don’t they simply focus on non-sports events to ease pressure from lawmakers and the courts? Although substantial wagering on any event attracts headlines, approximately 90% of Kalshi’s activity is sports-related. Yet Kalshi does not characterize itself as a sports gambling platform like industry leaders such as FanDuel or DraftKings. By framing its offerings as prediction markets rather than sports betting, Kalshi (and similar platforms), effectively enables sports wagering nationwide, including in states where traditional sports betting remains illegal.

The Super Bowl is the perfect storm for prediction market activity. As the most watched annual sporting event in the United States, it generates billions of dollars in wagering and draws widespread public attention. That level of engagement transalates to significant trading volume on the platforms that offer event contracts tied to the game. Users can take positions not only on what team will win, but also total points scored, margin of victory, and individual player statistics. And because these wagers are structured around clear and measurable outcomes, the Super Bowl provides an easily verifiable event for settlement. In essence, it’s a huge money maker for platforms that operate predictive markets.

Regulatory and private industry pushback

At the federal level, the CFTC regulates prediction markets as derivatives platforms and has signaled plans to clarify how “event contracts” fit within its framework amid rapid market growth and increasing legal challenges from states. State regulators have pushed back, most notably in Nevada, where a court barred Polymarket from offering sports event contracts after finding they resembled unlicensed sports betting. Other states have pursued similar actions, raising compliance concerns because violations of state gambling laws may also trigger federal liability under the Illegal Gambling Business Act.

Finally, the NFL itself has prohibited prediction market advertising during the Super Bowl, citing concerns about market integrity and consumer protection, while continuing to allow limited sportsbook advertising. The league has stressed that prediction markets lack the consumer protections and safeguards common in regulated sports betting, such as age verification, responsible gambling measures, and fraud monitoring. Therefore, they have prohibited league personnel and players from participating in them.

Core compliance risks

Prediction markets raise several regulatory and legal concerns. First, market integrity risks emerge because, without uniform oversight by a recognized gaming authority, these platforms may be vulnerable to insider trading and insufficient age verification controls. Reports of users profiting from nonpublic information have heightened these concerns. Second, there are consumer protection gaps, as state gaming regulators often lack jurisdiction over federally regulated derivatives, leaving prediction market users without the safeguards required of licensed sportsbooks. Finally, the legal classification of prediction markets remains unsettled. While platforms maintain that their contracts are financial market instruments rather than gambling, ongoing enforcement actions against them indicate that regulators may view these products differently.

Conclusion

The compliance landscape for prediction markets tied to the Super Bowl remains unsettled and reflects broader tensions between gambling and financial regulation, particularly regarding how such markets should be overseen. Federal regulators, such as the CFTC, continue to consider whether and how event contracts should be governed under derivatives law, while state courts have pushed back, arguing that these product offerings resemble unlicensed sports betting. This creates legal risks for consumers, who may have fewer protections than those offered by licensed sportsbooks. At the same time, these markets are attractive to individuals who otherwise would not be able to participate in traditional sports betting.

For now, the NFL is closely monitoring these platforms and has implemented restrictive policies to safeguard the integrity of the game and limit unregulated activity. However, as the Super Bowl continues to drive record wagering activity, clearer regulatory guidance is necessary to provide legal certainty not only for consumers but also for operators of prediction markets. The CFTC has suggested that such guidance could include explicit definitions of permissible event contracts and standardized disclosure requirements. Establishing a framework with these rules and disclosure standards would help promote consumer safety and allow legitimate prediction markets to operate with greater legal certainty.