Share This Article
Prediction markets in the United States have moved from civil litigation to criminal enforcement and here is a legal update on the situation in the US and Europe.
On 28 October 2026, Utah charged a leading US prediction market operator and its two co-founders with 13 felonies and one misdemeanor for promoting online gambling. Executives, market makers, suppliers and commercial partners now face a level of risk that a CFTC registration alone does not neutralise. A previous analysis explained why a US Supreme Court win will not reopen the EU. This article covers the US front and compares it with the UK, Italy, Spain and France.
Where the litigation on prediction markets stands
The federal appellate courts are divided:
- Third Circuit (April 2026): by a 2-1 majority, it held that New Jersey cannot apply its gambling laws to a leading operator’s CFTC-regulated sports contracts.
- Ninth Circuit (28 August 2026): it unanimously allowed Nevada to enforce its gaming laws against the same operator.
- Sixth Circuit: it also sided with the states.
- Supreme Court: New Jersey and a retail brokerage have filed certiorari petitions, while the operator has requested a rehearing en banc.
According to the American Gaming Association, states have won 38 of the 43 proceedings brought so far, roughly 88%. A decision on the merits is unlikely before 2027.
Why the Utah charges change the risk profile
The Utah complaint contains one second-degree felony for a pattern of unlawful activity, 12 third-degree felonies for online gambling promotion and a class A misdemeanor. Three elements stand out:
- The charges name the co-founders personally, which turns a regulatory dispute into individual liability for management.
- Utah had already sued the operator and one of its market makers to recover profits it considers illegally obtained, so liquidity providers are inside the enforcement perimeter.
- The CFTC sued Utah on 27 October, so federal and state authorities now litigate against each other.
A federal judge blocked Arizona’s earlier prosecution on preemption grounds, while in Utah the federal courts have so far sided with the state, the kind of forum-dependent uncertainty boards find hardest to price.
3. The CFTC is also setting limits on the product
The proposed rule published in June 2026 treats most sports event contracts as compatible with the public interest, with no safe harbour. Contracts on injuries, officiating, youth sports or events driven by chance are flagged as problematic, and “risk-free” promotions are under review. Federal supervision is starting to resemble sports betting regulation in its content, even though it remains derivatives regulation in its form.
4. Prediction markets in the UK, Italy, Spain and France
Europe has no federal-state conflict, because national gambling regulators have taken the lead and largely speak with one voice:
- United Kingdom: the Gambling Commission considers that prediction markets closely resemble betting exchanges, an activity already licensed in Great Britain. Sports and political contracts fall under its remit, while the FCA covers financial and certain climatic events and is reportedly reconsidering its retail ban. The UK is the only one of these markets with a clear licensing route.
- Italy: ADM put the largest crypto-based prediction market platform back on its blacklist in July 2026. Offering unlicensed betting is a criminal offence under Article 4 of Law 401/1989, and the advertising ban exposes sponsors and media partners.
- Spain: in May 2026 the DGOJ opened sanctioning proceedings against the two largest platforms and ordered their provisional blocking.
- France: on 16 July 2026 the ANJ ordered internet service providers to block the leading crypto-based platform, after geoblocking proved ineffective. Unlicensed online gambling is also a criminal offence.
The comparison is instructive: the criminal route that Utah has just opened is already the ordinary consequence of operating without a licence in Italy and France.
Prediction markets: what to watch next
- The operator’s response to New Jersey’s petition, which determines whether the Supreme Court can act in 2026.
- The motion to dismiss the Utah charges.
- The final CFTC rule and any change in the FCA’s position on retail access.
Until the legal foundation catches up with commercial momentum, any partnership with a prediction market should be structured on the assumption that regulators may win on both sides of the Atlantic.
Businesses assessing a US prediction market partnership are welcome to get in touch: I will be happy to put them in contact with my DLA Piper colleagues in the United States and across Europe. An overview of the licensing regimes in the main jurisdictions is available in DLA Piper’s Gambling Laws of the World guide.