Prediction Markets Under Regulatory Pressure.

Par DCN Editorial Team
Publié le 30 June 2026

Regulation

**Title: Prediction Markets Under Regulatory Pressure: Kalshi Blocked in Michigan, BitMart US Launches Regulated Offering**

**Introduction: Current State of Play**

At the start of 2025, prediction markets – platforms allowing bets on the outcome of political, economic, or sporting events – are experiencing exponential growth. According to a Dune Analytics report published in March 2025, the cumulative trading volume on the five main platforms (Polymarket, Kalshi, Metaculus, PredictIt, and BitMart Predict) exceeded $12 billion in 2024, compared to $3.5 billion in 2023. This rapid expansion is drawing the attention of US regulators, torn between financial innovation and consumer protection.

Two recent events illustrate this regulatory tug-of-war. On February 15, 2025, the Michigan Department of Commerce and Financial Services (MDIFS) issued a cease and desist order against Kalshi, one of the industry leaders, prohibiting it from offering its services in the state. Simultaneously, on February 20, 2025, BitMart US announced the launch of “BitMart Predict,” a prediction market offering fully regulated by the Commodity Futures Trading Commission (CFTC), marking a first in the United States. These two seemingly contradictory decisions reveal the complexity of the US regulatory landscape, where each state can impose its own restrictions while the federal government attempts to set benchmarks.

This article analyzes the implications of these developments, examines the role of the CFTC and the SEC, and outlines the outlook for 2025-2026, with a particular focus on Polymarket, the market leader.

**Kalshi Blocked in Michigan: A Worrying Precedent**

Kalshi, founded in 2018 by Tarek Mansour and Luana Lopes Lara, has established itself as the largest CFTC-regulated prediction platform, with over 2 million active users as of January 2025. Its model is based on event futures – derivative financial instruments whose value depends on whether or not an event occurs (e.g., “Will Bitcoin exceed $100,000 before December 31, 2025?”). Unlike Polymarket, which uses smart contracts on the Polygon blockchain, Kalshi operates via a centralized system but in compliance with federal regulation.

The block in Michigan took effect on February 15, 2025, following an MDIFS investigation. According to the official statement, the regulator believes Kalshi “offers betting contracts that are not authorized by Michigan law on gambling and sports betting.” More specifically, the MDIFS considers Kalshi’s contracts, although classified as “derivatives” by the CFTC, to actually fall under the definition of gambling, a jurisdiction reserved for states. The regulator cites the example of contracts on US presidential elections, which generated over $450 million in volume in 2024 on Kalshi, and which, in its view, “constitute bets on political events, which is contrary to public policy.”

Kalshi immediately contested this decision. In a blog post published on February 17, the company states that “event futures are legitimate financial instruments, approved by the CFTC, and do not fall under the jurisdiction of state gaming regulators.” The company announced its intention to take the matter to the US District Court for the Eastern District of Michigan, citing a violation of the Supremacy Clause. A similar precedent occurred in 2023 in New Jersey, where a court ruled in Kalshi’s favor, but the situation is becoming more complicated as several states – including California, New York, and Texas – are closely monitoring the case.

Data shows that Michigan accounted for approximately 6.5% of Kalshi’s users, or about 130,000 accounts, and a monthly volume of $18 million. The block immediately led to a 12% drop in the platform’s overall volume in February 2025, according to CoinGecko data. More seriously, this decision could create a domino effect: on February 22, the Illinois regulator announced the opening of a similar investigation.

**BitMart US Launches Regulated Offering: A New Model**

In response to this climate of uncertainty, BitMart US – a subsidiary of the crypto exchange BitMart, registered with the CFTC since December 2024 – unveiled its “BitMart Predict” offering on February 20, 2025. This is a prediction market platform fully compliant with federal regulation, using standardized futures contracts (like Kalshi) but with a particularity: all contracts are backed by real assets (USDC) and subject to automated compliance verification via a decentralized Chainlink oracle.

BitMart’s offering stands out due to three key characteristics:

1. **Federal License**: BitMart Predict operates under a Designated Contract Market (DCM) license granted by the CFTC in January 2025, allowing it to offer futures contracts without needing case-by-case approval, unlike Kalshi which uses a more restrictive Swap Execution Facility (SEF) license.

2. **Position Limits**: To avoid accusations of gambling, BitMart imposes strict limits: $10,000 per contract for political events, $50,000 for sporting events, and $100,000 for economic events. Users must also pass a financial knowledge test before accessing the markets.

3. **Guarantee Fund**: BitMart has set up a $50 million fund, deposited with the Federal Reserve Bank of New York, to cover potential disputes, a first in the sector.

According to BitMart US CEO David Chen, in an interview with CoinDesk on February 21: “We want to show that prediction markets can be innovative without being casinos. Our model is fully regulated, transparent, and offers guarantees to users. We hope this will serve as a benchmark for other platforms.”

Initial results are promising: in just one week, BitMart Predict attracted 45,000 users and recorded a volume of $12 million, primarily on contracts related to US politics (2026 midterm elections) and Fed decisions on interest rates.

**The CFTC/SEC Regulatory Framework: A Minefield**

To understand these developments, one must examine the role of the two main federal regulators: the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Their respective positions on prediction markets are a source of confusion and conflict.

The CFTC, under the leadership of its interim chairman John Smith (appointed in January 2025 after Rostin Behnam’s departure), has adopted a pragmatic approach. Since 2021, it has approved several Kalshi contracts, notably on elections, oil prices, and economic indicators. On February 12, 2025, the CFTC published a 45-page “Guidance on Event Contracts,” clarifying that these contracts are legitimate derivatives as long as they do not constitute “bets on sporting or political events contrary to the public interest.” This guidance was criticized by some commissioners, including Summer Mersinger, who voted against it, believing it “opens the door to excessively restrictive regulation.”

The SEC, for its part, remains hostile. Chairman Gary Gensler, although his term expired in June 2024, was replaced by Caroline Crenshaw in January 2025, who maintains a hard line. In a speech on February 18, 2025, Crenshaw stated that “certain prediction markets, particularly those using non-fungible tokens (NFTs) or smart...