This newsletter was sent to 3,430 subscribers who want to keep up with developments in the prediction market industry. Check out the podcast for a roundup and analysis of recent developments in prediction markets with Daniel O’Boyle of InGame.
Correction: The original version of Friday’s newsletter referred to “A lawyer for Kalshi” responding to Sen. Richard Blumenthal. The passage should have said “A lawyer for Polymarket” and has been corrected.
I know I am pretty critical of prediction markets. But their utility in politics and elections was on display this weekend after the race for governor of California was thrown into chaos.
If you missed the news, here’s a report from CNN to get you up to speed:
Eric Swalwell ends bid for California governor after sexual misconduct allegations: Rep. Eric Swalwell said Sunday he would withdraw from the California governor’s race in the wake of allegations of sexual misconduct that led to a nearly immediate campaign collapse, as staffers quit and prominent Democratic supporters urged him to drop out.
“I am suspending my campaign for Governor,” he posted on X. “To my family, staff, friends, and supporters, I am deeply sorry for mistakes in judgment I’ve made in my past. I will fight the serious, false allegations that have been made — but that’s my fight, not a campaign’s.”
Swalwell was long considered a top contender in a wide-open field with several prominent Democrats and two Republicans ahead of the state’s June 2 nonpartisan primary. But on Friday, his campaign was roiled when CNN and the San Francisco Chronicle published reports in which women accused Swalwell of sexual misconduct.
Say what you want about prediction markets, but their ability to generate probabilities about real-world events can be pretty interesting and useful. And the odds would be difficult (or impossible) to come by otherwise.
As soon as the news dropped about the accusations — and well before Swalwell dropped out — his odds at prediction markets plummeted. We could also read the news and tell it was bad, but the market put a number on exactly how bad it was.
While the race had tightened in recent weeks, Swalwell had been as much as a 70% favorite, and was still the favorite to win before the reports became public. Here’s how it looked (and looks) at prediction markets.
The markets now make Tom Steyer the favorite to win. And absent polls that won’t be able to tell us anything for days (assuming polls are being done), that data gives us a new picture of the race. It’s unquestionably one of the strengths of prediction markets.
One footnote to all this: Swalwell at one point shared his odds at Kalshi:
Any updates, Rep. Swalwell?
Prediction markets roundup
🚨The important stuff
Kalshi, IC360 Launch New Prediction Market Self-Exclusion Initiative (Sportico): “More recently, the prediction market company went further, becoming the active first partner of a new initiative called SelfExclude, run by IC360, in which users put themselves on a list spanning multiple leading exchange-betting apps. After a person joins the list, they cannot bet anywhere partnered with SelfExclude. The initiative has not been publicized by the companies. An FAQ sheet for SelfExclude says Kalshi is currently SelfExclude’s lone integrated partner. Polymarket, Robinhood and ProphetX are in the onboarding process.”
🧠 This is good! I applaud it! People are going to experience harm from prediction markets, and they should have an easy way to exclude themselves.
However, I hope Kalshi (and others) take it to the next step. The “responsible trading” tools — including this one — are not accessible from the top-level navigation of the app, and it’s buried in the UX. If you don’t know where it is or weren’t actively looking for it, it would be difficult to find. These tools are front and center on the website UX, but most retail users are on the app, presumably.
This shouldn’t discourage these efforts, but self exclusion is needed because a lot of people are using Kalshi and other prediction markets to gamble. To wit:
🍿Popcorn💪@Duke_BoiThat’s weird why would somebody need to self-exclude from providing truth in federally regulated event contract markets?
Dan Bernstein @dan_bernstein_EXCLUSIVE: Kalshi is the first member fully onboarded with IC360's new self-exclusion hub for prediction markets. The initiative will let people ban themselves from multiple leading prediction market platforms at once. https://t.co/uiSkJdalsi5:18 PM · Apr 11, 2026 · 2.34K Views1 Reply · 2 Reposts · 15 Likes
Temporary Restraining Order Blocks Arizona Criminal Enforcement Proceedings on Prediction Markets (CFTC press release): At the request of the Commodity Futures Trading Commission, the United States District Court for the District of Arizona granted a temporary restraining order this afternoon barring Arizona from continuing to pursue criminal charges against CFTC-regulated designated contract markets. This follows last week’s filing of a complaint against Arizona by the CFTC seeking an injunction barring Arizona from attempting to preempt federal law.
“The CFTC appreciates the court’s careful consideration of these important legal questions and the court’s decision to preserve the status quo,” said CFTC Chairman Michael S. Selig. “Arizona’s decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent, and the court’s order today sends a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
Last week, the CFTC filed complaints against Arizona, Connecticut, and Illinois, seeking declaratory judgments that federal law grants the CFTC “exclusive authority” to regulate event contracts and requesting permanent injunctions preventing the states from enforcing preempted state laws against DCMs. Two days ago, the CFTC also filed a motion for a Temporary Restraining Order and Preliminary Injunction to prevent Arizona from enforcing preempted state laws against CFTC-regulated DCMs.
🔍 This is another pretty significant court win for Kalshi. And if you are keeping track, there are three different fronts in AZ: Kalshi sued Arizona, Arizona filed criminal charges against Kalshi, and here the CFTC is suing Arizona.
But as always, you shouldn’t get too worked up about any single court decision. There is a long way to go in all of this!
Kalshi hit a new record for weekly volume of $3.4 billion: More at The Closing Line (paywall). Kalshi is still growing between traders on its own platform and via volume provided by partners.
More than a billion dollars of the weekly total came on parlays and totals, which means we should be careful with equating these numbers with sports betting handle, even moreso than usual. Although all volume is meaningful to Kalshi, only a fraction of the hundreds of millions of dollars in parlay volume can be attributed to retail traders.
The Masters was big for Kalshi, with more than half a billion dollars traded on the pro golf tournament:
Sam McQuillan@sam_mcquillThe Masters surpassed $545M in trading volume on Kalshi — its most-bet sporting event ever. “Masters Champion” is its No. 2 most-bet single market all-time ($460M), behind only "Who will win the Presidential Election?" ($535M).10:59 PM · Apr 12, 2026 · 104K Views7 Replies · 22 Reposts · 146 Likes
Senator contacts leagues over ‘gambling’s ugly takeover’ (ESPN): “As prediction markets expand partnerships with major U.S. sports leagues, a U.S. senator sent letters to six league commissioners Thursday raising concerns about ‘gambling’s ugly takeover of sports.’”
Press release | Blumenthal Presses American Sports Leagues on Gambling & Prediction Market Partnerships: U.S. Senator Richard Blumenthal (D-CT) today wrote to major American sports leagues raising concerns about the further entrenchment of gambling and prediction markets in professional and college sports. In letters sent to the CEOs of Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), National Hockey League (NHL), Major League Soccer (MLS), and the National Collegiate Athletic Association (NCAA), Blumenthal pressed the leagues on steps they are taking to preserve the integrity of the game, prevent fueling addiction, protect athletes, and comply with state laws in any partnerships with prediction markets.
Copies of letters here. From a letter to Major League Baseball Commissioner Rob Manfred: As sportsbooks and prediction markets become more entangled and entrenched in professional and college sports, I am writing to request information about Major League Baseball’s (MLB) partnership with Polymarket and FanDuel (along with any other operators) and the steps that the MLB is taking to ensure that its partnerships preserve the integrity of the game, prevents fueling addiction, protects athletes, and complies with state laws.
Since the federal ban on sports gambling—a ban supported by the leagues—was overturned eight years ago, gambling has permeated every aspect of the game. Commercial breaks during games are littered with ads for sportsbooks and prediction markets, discussions of betting and spreads are a staple of sports news and commentary, and gambling companies sponsor teams and stadiums. …
Sportsbooks and prediction markets are marshalling every resource, partnership, endorsement, and dataset to expand and dominate this lucrative market. Operators have poured well over half a billion dollars annually into marketing and engaged in sophisticated targeted advertising and promotional offers to lure consumers. Further fueling this deluge, prediction markets, which are essentially operating as gambling companies, have sought to circumvent state gambling regulations, claiming to operate nationally under the Commodity Exchange Act even in states where gambling is banned.
Kalshi had an issue resolving a UFC fight: Like most places that take bets on sports, Kalshi had markets on Chris Padilla vs. MarQuel Mederos in the UFC. Usually this wouldn’t be newsworthy, but there were some shenanigans after the fight. From Yahoo Sports (emphasis added):
“A scoring error has taken a win away from Chris Padilla after he was initially scored a majority decision victory over MarQuel Mederos at UFC 327 on Saturday. The scorecards originally gave Padilla the nod with two judges giving him the fight with 29-27 scores while the third dissenting official had it 28-28 after three rounds. Part of the confusion came from a point deduction issued in the third round after Mederos poked Padilla in the eye for the second time, which led to referee Keith Peterson penalizing him for the foul.”
“The decision was announced with Padilla winning but the UFC 327 broadcast later clarified the scoring error.”
And that’s where the problem came for Kalshi, which declared Padilla the winner:
Kalshi added this language to the market after the resolution: “Important information: If the following fight ends in a draw or no contest, the market will resolve to 50/50. If the fight is cancelled, the market will resolve to a fair price for each fighter in accordance with the rules. Note that any revisions after Expiration will not be considered. Therefore, if any participant is disqualified, removed, or the official result of achievement is reversed or changed in any way after the Contract expires, that will not impact the market's resolution.”
The market says resolution sources for the market were The Wall Street Journal, Fox Sports, and ESPN. It’s worth nothing that an issue like this can usually be made right by sportsbooks, but the situation is far more complicated at an exchange.
It’s also worth noting that Polymarket graded the market a draw and paid out 50-50:
And, betting aside, aren’t we supposed to be getting the truth from prediction markets? That we’re still being told by Kalshi that Padilla won after the fact doesn’t seem super truthy.
⚖️ Legal and regulatory news
‘Cowboy’: Michael Selig, a top Trump Wall Street regulator, comes out swinging (Politico): “These are not casinos. These are not sportsbooks. They’re markets,” Selig told POLITICO in an interview. “The bottom line is, we’re going to defend our authority in court.” …
“He’s not trying to pretend that he’s a normal regulator,” said an attorney who works on CFTC issues and was granted anonymity to speak candidly. “He’s acting more like a cheerleader for the industry.”
Taking Stock Of CFTC Proposed Rulemaking Comments So Far (InGame): “On March 16, the Commodity Futures Trading Commission (CFTC) issued guidance around proposed rulemaking for prediction markets, and with three weeks remaining before the April 30 deadline for comment submissions, a flood of comments have already rolled in — with some notable exceptions.”
Minnesota Prediction Market Ban Bill Advanced to Senate (Covers): “The Minnesota Senate is closer to a vote on one of the nation’s first prediction market restriction bills after lawmakers advanced a ban bill Friday. If passed, the bill would reinforce the state’s existing bans on all forms of online gambling. All prediction markets that are deemed not to be a “legitimate” investment tool would be prohibited from accepting event contracts on sports, politics, or other non-investment related events. The Senate Rules and Administration Committee approved the bill forward on a voice vote Friday. A full Senate vote could come later this month.”
📣 Industry news
Underdog is adding Kalshi markets: Underdog added language to its website — including a page called “How Markets Are Settled” — implying that it is now using Kalshi markets in addition to Crypto.com markets. The development was first reported by SBC Americas.
This page talks more about what Underdog is doing:
What happened to Crypto.com? We upgraded the system powering your Predictions. If your account is powered by Kalshi, you’re now trading through Underdog Predict — which means we manage your account and funds directly instead of through Crypto.com. If your account is powered by Crypto.com | CDNA, nothing changes for you right now.
What is the relationship between Underdog and Kalshi? Underdog Predict (UDM, LLC) is a futures commission merchant (FCM) registered with the CFTC and a Member of the NFA. We provide customer accounts and route trades to Kalshi, a CFTC-regulated designated contract market (DCM) where the event contracts are listed. We are an independent company and are not owned by Kalshi.
Pile of Famous Athletes Quietly Invested in Kalshi Months Ago (Front Office Sports): As part of the company’s December Series E round—which in total raised $1 billion at an $11 billion valuation—Kalshi picked up the following investors:
Two-time WNBA MVP Breanna Stewart
WNBA legend Diana Taurasi
Connor McDavid of the NHL’s Oilers
Former NFL stars Marshawn Lynch and Richard Sherman
The athletes invested as part of a $4.7 million slice of the total $1 billion investment. Their investment came through Factory Holdings, which bills itself as a “family office platform built for athletes, entertainers, and next-generation wealth creators,” according to a Thursday statement.
Kalshi did not name any of the athlete-investors when it announced the Series E.
👉 From the press release: “The Kalshi investment included participation from investors across sports, entertainment, and business, including Marshawn Lynch, Richard Sherman, Diana Taurasi, Nneka Ogwumike, Breanna Stewart, Connor McDavid, Ajay Mitchell, Jaime Jaquez Jr., and Gabriela Jaquez, alongside executives and family offices within the broader Factory network.”
This is all clearly allowed, but it feels like leagues just letting active athletes be financially involved with a
betting platformprediction market is going to generate blowback, eventually.
Robinhood excludes some prediction markets over manipulation fears (Financial Times, paywall)
There’s a prediction market for clinical trials, apparently:
Michael@endpointarenaQuick run down of the features on Endpoint Arena, the prediction market for clinical trials. the home page has all the trials:
3:13 PM · Apr 12, 2026 · 189K Views44 Replies · 47 Reposts · 767 Likes
📖 Everything else you should know/read
Polymarket’s $269 Million Question: Did U.S. Forces ‘Enter’ Iran? (WSJ): “While the Middle East was breathing a sigh of relief at the U.S.-Iran cease-fire, a big-money battle was raging at Polymarket. It revolved around the question: Had American forces entered Iran?”
“For weeks, traders on the crypto-based prediction market had been piling into bets on whether U.S. forces would enter Iran by April 30. Many traders and outside observers saw the betting contract as a gauge of whether President Trump would order a ground operation to seize Iran’s enriched uranium or islands in the Persian Gulf.”
Polymarket Bets on Orban Loss Jump Further as Hungarians Vote (Bloomberg): “Contracts on Polymarket for the likelihood of opposition leader Peter Magyar becoming the next prime minister of Hungary exceeded 80% for the first time as voting was under way in Sunday’s election. With turnout data from the morning showing Hungary potentially on track for record participation, contracts for Orban to be the next premier one point fell as low as 18%.”
👉 Orban later conceded defeat.
Google says Polymarket bets showing up in News was an ‘error’ (The Verge): “Polymarket bets started popping up in Google News alongside legitimate news articles. But now those results aren’t showing, and Google says they were never supposed to. Spokesperson Ned Adriance told The Verge that ‘Google News is designed to show sources that create content about current issues, events, and important topics, and we have policies for sites to be eligible to appear. This site briefly appeared in Google News in error, and it is no longer surfacing in News.’”
🤔 I had noticed this a while ago in Google, and it happened far more than briefly. I figured it was by design, but I guess not!
Prediction markets are a category that can sustain: Boardroom CEO Kleiman (CNBC, video): CNBC’s “Squawk Box” team discusses the Masters tournament, prediction markets and more with Rich Kleiman, co-founder and CEO of Boardroom.
Weather Prediction Markets Are Booming. Can They Improve Forecasts? (Bloomberg): “What’s changed is the sheer number of people placing bets on weather markets — and the amount of money flowing through them. Trading volume for the January snowstorm topped $6 million on Kalshi, one of the largest weather contracts ever traded on the rapidly growing platform.”
‘That’s still tiny compared with Kalshi bets on sports and elections. But weather trades are gaining traction, drawing in casual participants, weather experts and AI-driven weather-tech firms testing their wares. As these markets grow, weather nerds and climate researchers are debating whether prediction markets can improve forecasts by aggregating knowledge — and, in turn, inform investment and policy — or whether they’re simply zero-sum games in which uninformed gamblers make (or lose) a quick buck.”
🔍 Weather is still only around 1% of trading volume at Kalshi, fwiw.
Rep. Thomas Massie tweets odds for his race:
Thomas Massie for Congress@MassieforKYMy race is VERY CLOSE, so why do prediction markets show me ahead 66% to 33%? 🎲Because those are ODDS, not POLLS 🚨They mean there’s a 1 in 3 chance I lose I need your generous donations for the next 38 days just to hang on to my single digit lead. secure.thomasmassie.com/donate
12:46 PM · Apr 11, 2026 · 134K Views285 Replies · 1.4K Reposts · 8.45K LikesTalking Prediction Markets (Capitol Account): Friday Q and A: With all the sturm und drang surrounding prediction markets, it’s easy to forget that they burst into the mainstream less than two years ago. So it’s not surprising that their regulatory framework is far from settled. This week, we sat down with someone whose work on the issue spans more than a decade.
Jon DeBord, Robinhood Markets’ head derivatives and banking lawyer, joined the brokerage a few weeks ago and is already enmeshed in the morass of court cases, legislation and expected agency rules that the industry is now confronting. The firm, which is the largest retail broker for event contracts, sees a bright future for the nascent market and is a strong supporter of the CFTC’s effort to impose oversight at the federal level.
DeBord argues that many event contracts – even on football and baseball games – aren’t gambling, but rather swaps that fall neatly into the CFTC’s remit. Still, he sees lots of potential action ahead at the agency, including decisions on what types of wagers are in the “public interest” and a review of consumer-protection rules. The requirements, he notes, apply differently to brokers like Robinhood and exchanges like Kalshi or Polymarket that offer direct access to investors. What follows is our (lightly edited and condensed) conversation.
