Democratic Midterm Success Unlikely to Favor States in Prediction Market Disputes

A Democratic victory in the November midterms will not deliver states the regulatory advantage they seek over prediction markets. Felix Shipkevich, Special Professor of Law at the Maurice A. Deane School of Law at Hofstra University, told Casino Beats that no significant regulatory changes should be expected even if Democrats gain control of the Senate or the House.

Shipkevich noted it is hard to predict the election outcome. Yet the Commodity Futures Trading Commission will continue to claim exclusive jurisdiction and authority over federally regulated event contracts for the next two-plus years of the presidency. The CFTC has filed a number of lawsuits to reinforce this jurisdiction through the courts.

He would be surprised if any court decides against the CFTC. These contracts are embedded in the Commodity Exchange Act and should only be governed at the federal level. Polymarket and Kalshi have priced a Democratic win for the House at over 85%. A Republican upset would leave existing policies on prediction markets largely unchanged.

Sportsbook Expansion Raises Compliance Risks

Major gambling operators have shifted from opposition to participation. DraftKings, Fanatics, and FanDuel launched prediction market platforms in December. Underdog followed last month. Sector monthly trading volumes have risen to $24 billion.

Shipkevich said this entry will likely intensify existing legal disputes and amplify calls for regulatory guidance. Some federal clarity exists from the CFTC, but many issues remain unaddressed. These include election integrity, market manipulation, advertising, age restrictions, consumer protection, and anti-money laundering requirements.

Tribal gaming leaders have been vocal critics. David Bean, Chairman of the Indian Gaming Association, said this is no innovation but unlawful gambling dressed up as finance. The National Indian Gaming Commission Chairman Jonodev Chaudhuri described the prevailing mood as one of collective worry.

The Path Forward for Prediction Markets

Shipkevich expects prediction markets to survive and become a meaningful part of the financial and consumer landscape. Survival requires operators to tightly police their offerings. It cannot rest on the assumption that every yes or no contract can be offered nationwide merely because it is listed on a CFTC-regulated exchange. Operators and investors must track court outcomes and prepare for heightened compliance demands as sportsbooks deepen their involvement.

Reporting: Casino Beats

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