Prediction Market Litigation Accelerates in Multiple States While Governors in Colorado and Louisiana Weigh Key Gambling Bills
Prediction markets sit at the center of U.S. gambling regulatory tension this week. Hearings are set in Connecticut and Rhode Island on ongoing cases involving Kalshi and Polymarket. At the same time governors in Colorado and Louisiana face decisions on bills that tighten responsible gaming rules, expand background checks, and reshape oversight.
From the supplier side this flurry of activity matters because operators need clear lines on what contracts can run and how states will enforce them. The next few days could shift risk exposure across sportsbooks and prediction platforms alike.
Prediction Market Hearings Move Quickly in Rhode Island
Last week Kalshi sued Rhode Island in federal court while the state separately sued Kalshi and Polymarket in state court. Both cases are advancing at speed.
A hearing on Kalshi’s motion for a temporary restraining order and preliminary injunction is scheduled for May 26 before District Judge Mary S. McElroy. Polymarket has already removed the state case to federal court. The next likely move is for Rhode Island to file a motion to remand it back to state court.
What operators watch here is whether the federal judge issues a ruling and how the remand fight plays out. From my experience across European regulated markets these procedural steps often set the commercial tone long before any final verdict lands.
Connecticut CFTC Case Heads to Prefiling Conference
A separate hearing is set for May 27 in the Commodity Futures Trading Commission’s lawsuit challenging Connecticut’s attempt to enforce restrictions on prediction markets. Judge Vernon D. Oliver scheduled a telephonic prefiling conference concerning the defendants’ proposed motion to dismiss.
The parties are also expected to discuss the pending motion to intervene and the anticipated Rule 26(f) report. Timelines for motions to dismiss and intervention requests remain the immediate focus.
This is another live test of federal preemption arguments. The CFTC has already sued Minnesota after that state enacted a ban on prediction markets. It previously filed lawsuits against Arizona, Illinois, Minnesota, New York, and Wisconsin and has filed amicus briefs in Massachusetts, Nevada, and Ohio.
Washington Position Strengthened After Ninth Circuit Ruling
Washington won its motion to remand Kalshi’s lawsuit back to state court earlier this month. Last week the Ninth Circuit denied Kalshi’s motion to stay, strengthening the state’s procedural position.
That opens the door for Washington regulators to pursue emergency relief in state court. A temporary restraining order aimed at halting Kalshi’s operations while litigation proceeds is one possibility.
Nevada successfully pursued a similar strategy after succeeding in its remand fight against Kalshi. The pattern is clear. States that win the remand battle often move quickly for interim relief.
A risk here is that overlapping federal and state actions create uncertainty for market participants. If multiple states issue cease-and-desist orders or launch new lawsuits the operational cost of compliance rises fast. Kalshi could file additional preemptive suits and the CFTC could add actions supporting federal preemption. Each new filing adds another variable operators must price in.
Colorado and Louisiana Governors Face Bill Decisions
Colorado Gov. Jared Polis could soon act on SB 131 and SB 163. SB 131 originally included a ban on prop bets and a provision that would have prevented sportsbooks from limiting sharp bettors. Lawmakers removed both. The final version focuses on responsible gaming measures including restrictions on advertising and promotional language plus deposit limits.
SB 163 would centralize several gaming regulatory functions within state government and restructure parts of Colorado’s gaming oversight framework. The decision on whether Gov. Polis signs or vetoes either bill carries direct implications for how sportsbooks manage customer acquisition and risk limits.
In Louisiana Gov. Jeff Landry has SB 325 and SB 339 on his desk after signing two sweeps-related bills into law last week. SB 325 would allow regulators to ban bettors who threaten violence or harm against any person involved in the sporting event where the threat is related to sports gaming. If enacted Louisiana would join Ohio, West Virginia, and Wyoming with similar measures.
SB 339 would expand background check requirements connected to gambling licensing and regulatory oversight. Whether Gov. Landry signs either bill will shape the compliance burden for operators already navigating fragmented state rules.
The Bottom Line
These parallel tracks of litigation and legislative action show how fragmented the U.S. prediction market and sports betting landscape remains. Hearings this week in Rhode Island and Connecticut plus potential emergency relief in Washington could accelerate clarity or prolong uncertainty. Governor decisions in Colorado and Louisiana will add another layer of operational adjustments for sportsbooks and prediction platforms. After eighteen years in iGaming and sportsbook operations the pattern is familiar. Markets price in regulatory overhead faster when the rules are clear. The next seven days will test how quickly that pricing happens here. Operators should track the exact outcomes on the May 26 and May 27 hearings and the governor deadlines because those results will set the practical boundaries for the rest of the year.
