State attorneys general (AGs) are among the most active and influential regulators in the U.S., using broad statutory authority, political visibility, and growing technical knowledge to shape policy and enforcement across sectors. In 2025, they asserted their authority to shape the legal and regulatory environment across the U.S. through aggressive and coordinated action. Despite changing
In this episode of Regulatory Oversight, host Stephen Piepgrass, who leads Troutman Pepper Locke’s Regulatory Investigation Strategy and Enforcement (RISE) practice, is joined by partner Lu Reyes for a deep dive into the national security and enforcement implications of predictive markets. The discussion centers on a headline‑grabbing Polymarket trade that appeared to anticipate former Venezuelan President Nicolás Maduro’s capture and yielded roughly $400,000 in profit, raising questions about insider trading and classified information leaks.
Popular prediction markets platforms recently announced that they have formed the Coalition for Prediction Markets. According to the coalition’s website, it aims to unite exchanges, brokers, and advocates to expand consumer access to safe, transparent, and integrity-driven prediction markets in the U.S. The coalition contends that prediction markets currently operate under a federal framework, but that framework is being threatened by state regulators “seeking to block consumer access and extend their own authority.” This messaging signals that prediction market operators are prepared to vigorously oppose state regulation in an effort to preserve exclusive federal oversight.
In early December 2025, federally regulated derivatives exchange KalshiEX LLC filed suit in the U.S. District Court for the District of Connecticut challenging a cease-and-desist order issued by the Connecticut Department of Consumer Protection (DCP) directing Kalshi to halt operations in the state. The DCP contends that Kalshi, along with platforms such as Robinhood and Crypto.com, operates an unlicensed and illegal sports betting platform in violation of Connecticut law. According to the agency, Kalshi’s sports event contracts fall squarely within the state’s definition of sports wagering and expose consumers to risk because they operate outside Connecticut’s regulated gaming framework, lack required integrity controls, and are not subject to consumer protection oversight. Connecticut officials have emphasized that “a prediction market wager is not an investment,” and that Kalshi’s platform offers no recourse for consumers under state law if disputes arise.
In this episode of our special 12 Days of Regulatory Insights podcast series, Stephen Piepgrass is joined by Cole White from our RISE Practice Group’s gaming team for a timely, candid conversation on integrity risks and regulatory trends reshaping the legal gaming landscape.
Many prediction market firms have sought to avoid state regulation by emphasizing how their services differ from traditional sports betting. They characterize their offerings as “event contracts” or “swaps,” which are only subject to Commodity Futures Trading Commission (CFTC) oversight and note that they operate peer‑to‑peer exchanges, earning revenue from transaction fees rather than customer losses. Many state regulators have disagreed with this argument, however, asserting that event contracts cannot be distinguished from state-regulated gaming. Federal courts in various states have reached different conclusions on this issue. A Nevada federal court has now weighed in, ruling that some of these services fall under state gaming law.
On November 18, two prominent sports wagering and fantasy sports operators announced that they are leaving the American Gaming Association (AGA). The AGA is the leading trade group for casinos, gaming manufacturers, and sportsbooks. The split follows the AGA’s recent announcement of its firm stance against “prediction markets” and a forthcoming resolution to exclude companies that offer them. Prediction markets include platforms that allow individuals to trade on the outcomes of future events — whether sports-related or not.
Troutman Pepper Locke’s State Attorneys General Practice Group, was mentioned in the November 4, 2025 Law.com article, “Robinhood Shareholders Gleeful Over Firm’s ‘Prediction Market’ Push, But State AGs Say It’s Illegal Gambling.”
The outcome of the Massachusetts litigation and litigation in other states “will set important precedent for how prediction markets are treated
On October 7, 2025, Kalshi, a platform specializing in prediction market trading, filed a lawsuit against the Ohio Casino Control Commission (OCCC) and Ohio attorney general (AG), alleging that their regulatory actions overstep state authority. The complaint seeks to block enforcement of a cease-and-desist order that was issued by the OCCC in the spring, which accused Kalshi of “operating online sports gaming” and warned Ohio licensees that partnering with Kalshi could jeopardize their licensing status and integrity.
Massachusetts Attorney General (AG) Andrea Joy Campbell recently filed a lawsuit in Suffolk Superior Court against KalshiEX LLC (Kalshi), an online prediction market platform, alleging that the platform runs an illegal sports wagering operation without an appropriate license in Massachusetts. The complaint asserts that Kalshi offers Massachusetts consumers the equivalent of sports betting under the guise of “event contracts,” letting users wager yes-or-no options on sporting outcomes just like traditional bets. In the AG’s view, these contracts closely resemble sports wagers offered by licensed sportsbooks, and Kalshi actively promoted its sports products via TV and social media in the Commonwealth while allowing trades through third-party apps like Robinhood. Because Kalshi asserts that its event contract business does not constitute gaming, Kalshi never obtained a license from the Massachusetts Gaming Commission to engage in gaming-related activities.