Federal regulators say they oversee event contracts; New York says the sports-based varieties are unlicensed bets. But where does the debate stand and what can you do in the meantime?
Between weekend football games and October baseball, the action is constant; the apps, persistent. Beside traditional sportsbooks, a different kind of app has arisen, one that lets you trade contracts on outcomes. It’s growing fast – prediction market volume crossed $25 billion in March alone, according to one law firm. New York crafted its betting laws around sportsbooks. Now the state is testing whether those laws apply to these apps as well.
How Event Contracts Work
Each contract has a price between $0 and $1. If your forecast is correct, it’ll pay out $1… If it’s wrong, it settles at $0. A $0.40 price might indicate a 40% chance in the eyes of the crowd, so you’re really reading odds.
Sports now make up most of the action; State Comptroller Thomas DiNapoli’s September report found that about 80% of trading volume on one such platform was sports-related, against 51% on another. New York is a big part of that picture. The state had 7.2 million mobile sports betting accounts in 2025. June’s wagers were up 36.6% from a year earlier, influenced by the Knicks’ championship win.
The platforms point to a federal law that they say classifies such contracts as swaps, which would put regulation in Washington. Many states disagree.
Where the Legal Battle Stands
The dispute officially began in October 2025, when the state Gaming Commission sent a cease and desist letter to one major platform, which filed a lawsuit in turn. In July, a federal judge in Manhattan declined to block New York from enforcing its laws, saying that federal law was unlikely to override them. Next, on July 31, Governor Kathy Hochul and Attorney General Letitia James sued that same company, arguing that it runs an illegal gambling operation. In September, the state filed a lawsuit against another major player; the company sued New York in federal court the same day.
Federal appeals courts are divided too. The Third Circuit sided with a platform in one case, but the Ninth and Sixth Circuits let states enforce their own laws. New Jersey has asked the U.S. Supreme Court to hear the Third Circuit case.
Washington is pushing back. On October 9, the Commodity Futures Trading Commission issued a proposed rule that would classify event contracts, including sports ones, as swaps; the agency’s chairman says it has exclusive authority over them. Comments are due 30 days after the proposal appears in the Federal Register.
That creates a paradox – an app can sit on your phone while the state argues it shouldn’t.
Reviewing Prediction Market Apps
With legal challenges continuing across several states, checking an app’s availability and terms has become increasingly important. Covers compares different apps for prediction markets, including their trading fees, payout times, contract types and state restrictions.
But availability doesn’t necessarily settle the legal question. Some platforms operate under federal derivatives regulations, while New York maintains that certain sports contracts violate its gambling laws. Before depositing money, users should review the platform’s regulatory status, current restrictions and withdrawal terms.
Some Protections to Consider
In a February consumer alert, Attorney General James warned that prediction market platforms operate without consumer protections or Gaming Commission oversight. She recommends that you confirm any sports betting platform has a New York license and that if they do not, you use the apps at your own risk, since there’s no guarantee of returns or access to your funds.
DiNapoli’s report noted that prediction markets can accept customers at 18 while New York sportsbooks require bettors to be 21; it also found they face fewer restrictions on advertising. Before you trade, consider running through this checklist:
- Check the age requirements
- Ensure the platform is on the Gaming Commission’s list of licensed operators
- Review how each contract pays out
- Set a limit for yourself – only trade with funds you can afford to lose
- Review withdrawal limits and timelines before you fund your account
Debt can accumulate more quickly than you’d expect, so a plain-language look at how debt builds up could act as a timely warning of when it’s still fixable, and when bigger options come into play. Behavioral addictions, among which online gambling is one, can be treated too. A local guide to what effective counseling looks like explains how that works.
If you’re considering reaching out, the state’s HOPEline is available 24/7 at 1-877-846-7369 (or text HOPENY to 467369). It logged 2545 calls in 2025, up 8.5% from 2020.
What Might Happen Next?
The courts are one place to watch. The U.S. Supreme Court hasn’t said whether it will hear New Jersey’s case; none of the cases it took up in its first orders of the new term involve prediction markets.
Another possibility lies in Albany: the ORACLE Act, introduced by State Senator Joseph Addabbo Jr., would ban markets involving sports and politics (among other things) while setting a minimum age of 21. It cleared a committee in May and now sits in the Finance Committee.
The bill’s passage is by no means certain, but expect more news as the courts and Washington have more to say.