NEXTPredict New York Day Two Surfaces Federal-State Regulatory Clash and $1.5 Trillion Prediction Market Scale
NEXTPredict New York day two spotlighted the federal-state jurisdiction fight over event contracts ahead of a Supreme Court ruling. Bank of America reported $28bn weekly volume, annualizing to a $1.5tn market, with Kalshi at 75-80% share. Sportsbooks face a competitive squeeze from prediction platforms’ tax and age advantages.
SCCG Take — Federal resolution looks probable but will not erase state tax interests or the license risk for operators straddling both markets. Sportsbooks must now model scenarios that protect core licenses while addressing younger users and zero-tax competition.
Day two of NEXTPredict Summit New York zeroed in on the mounting dispute between federal and state authority over sports event contracts and prediction markets. Panels examined an impending Supreme Court decision, rapid market expansion, and ripple effects on listed operators and the imminent midterm elections.
Jovy Dedaj, head of litigation at Kalshi, described conflicting directives from state courts and the CFTC. The firm followed a Michigan court order to close positions only to face CFTC criticism for doing so. In New York, the CFTC advised against compliance pending a judicial ruling. Dedaj stated that satisfying one federal regulator alongside 50 state regulators is simply not feasible.
Josh Sterling, Milbank partner and former CFTC official, voiced strong confidence in an eventual single federal resolution drawing on CFTC rules, case law, and legislation that might preserve state tax authority. Sterling observed that sufficient financial stakes typically produce workable compromises. Bill Pascrell III of Princeton Public Affairs Group countered that a Supreme Court decision upholding the Third Circuit ruling in Kalshi’s favor would threaten state gaming regulators’ positions as operators extend into casino game event contracts. Pascrell cited New Jersey’s shift from a proposed ban to taxation as a constructive path and flagged sweepstakes regulation as the emerging flashpoint after 32 states imposed bans in the past 18 months.
Market Volume and Operator Pressure
Bank of America research analyst Julie Hoover said prediction markets did $28bn of volume this week, “up nearly 30 times from just a year ago today.” On an annualised basis that is $1.5tn. The bank had projected a $1tn market by 2030; that threshold was crossed in less than a year. Hoover placed Kalshi’s US market share at 75% to 80%, with Polymarket at 10% to 15% and sports still driving roughly 80% of turnover. Shaun Kelley, Bank of America managing director, characterized the position of publicly listed sportsbooks as lose-lose. Since September 2025, Flutter shares have declined 75% and DraftKings shares 60%. Prediction platforms hold advantages of nationwide access, no state gaming tax that Kelley termed a 30 percentage point profit edge, and the ability to enroll customers aged 18 to 21.
According to NEXT.io’s live coverage, the sessions also addressed midterm election forecasting, with prediction markets now supplanting exit polls and raising risks of foreign manipulation in thinly traded venues.
Forward Market Signals
The unresolved legal contest, combined with outsized volume growth, compresses the timeline for sportsbooks and regulators to define coexistence terms. Operators that ignore the 18-to-21 demographic access and tax differential risk share erosion; those that engage risk license exposure in states that view event contracts as gaming. The Supreme Court outcome will likely set the boundary that determines which business models survive intact.
Reporting: SCCG
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
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