Oversight Proposal Targets Prediction Market Activity in New York

New York State Assemblyman Clyde Vanel introduced legislation on Tuesday to impose stricter oversight on sports prediction markets, aiming to place more precise limits on how these platforms operate in New York.

The proposal responds to the rapid rise of sports-focused event contracts , which generated billions of dollars in wagers. 

Vanel's bill, the ORACLE Act, centers on sports-based prediction markets, among other things. It would restrict certain types of sports-related events from being listed and require platforms offering contracts tied to regulated sports wagering activities to follow the same rules as licensed New York sports betting operators.

Additional provisions in the bill support that core focus by mandating protections against problem gambling, limiting user exposure, and applying anti-manipulation standards across the state's betting industry. Vanel said aligning event-contract operators with the safeguards required of mobile sportsbooks would bring consistency to the regulation of sports wagering-adjacent products.

The legislation follows testimony at an Assembly hearing on problem gambling, where New York State Gaming Commission Executive Director Robert Williams emphasized that sports prediction markets currently operate without any regulatory controls. 

Williams noted that New York law defines which sports leagues and wager types are permissible and emphasized that specific event categories, such as natural disaster casualty counts, would never qualify under the state's statutory framework.

New York has also issued a cease-and-desist order to Kalshi, asserting the company is offering unlicensed sports wagering through its sports-related contracts. Kalshi, which is currently valued at $5 billion following a Series D funding round last month, has filed a federal lawsuit in response, seeking to block the state from enforcing that order. 

This sets up a wider legal dispute over whether sports prediction markets fall under commodities regulation or state gambling law.

Federal ruling in California adds momentum

As debates were underway in New York, Kalshi won a major legal battle in California when a federal judge refused to block the company's contracts for sports events. US District Judge Jacqueline Scott Corley rejected a request from three tribes that argued the platform was facilitating unlawful Class III gambling on tribal lands. 

The tribes contended that Kalshi and its partners, including Robinhood Derivatives, were operating illegal wagering products and misleading consumers with claims that their offerings were legal nationwide.

Corley found that the tribes had not shown a likelihood of success on claims brought under the Indian Gaming Regulatory Act (IGRA) or the Lanham Act. The court determined that Kalshi's public statements regarding legality constituted opinion supported by prior district court decisions. 

Corley also ruled that the tribes lacked standing to allege competitive harm, noting that both tribal casinos and Kalshi bar users who are 17 and under.

The judge held that Congress assigned oversight of event-contract markets to the Commodity Exchange Act and the Commodity Futures Trading Commission (CFTC), not IGRA. Because Kalshi is a registered exchange subject to CFTC supervision, its contracts are exempt from the Unlawful Internet Gambling Enforcement Act's definition of wagers. 

Corley acknowledged the tribes' policy concerns but concluded that any changes to the regulatory framework must come from the CFTC or Congress.