Prediction markets Kalshi and Polymarket lost a bid to freeze state enforcement actions this week, as the Ninth Circuit Court of Appeals rejected their emergency stay requests. The ruling deepens a circuit split with a New Jersey appeals court that previously sided with Kalshi, setting the stage for what could be a Supreme Court showdown over whether states have jurisdiction over event contracts. Meanwhile, regulators in Indonesia, Tennessee, and the EU are piling on with new restrictions.
Ninth Circuit ruling
A three-judge panel ruled that federal preemption under the Commodity Exchange Act does not give prediction markets blanket immunity from state gambling laws. The decision blocks Kalshi and Polymarket from halting enforcement actions in Nevada and Washington while their broader lawsuits play out. The ruling directly conflicts with a Third Circuit decision from New Jersey, which upheld an injunction in Kalshi's favor. That split all but guarantees the Supreme Court will eventually have to weigh in on whether event contracts are commodities or gambling.
Indonesia bans Polymarket
Indonesia's Ministry of Communication and Digital Affairs classified Polymarket as an online gambling site on May 25 and requested a national block. The trigger: a contract betting on President Prabowo Subianto's resignation that racked up about $46,000 in trading volume. The contract went viral in a country where political betting is illegal. Polymarket is now inaccessible in over 33 jurisdictions, including India, Brazil, and Singapore. The Indonesian ban came fast — within weeks of the contract appearing.
Tennessee passes twin laws
Tennessee Governor Bill Lee signed SB 2136 into law, making the state the ninth to ban sweepstakes casinos and dual-currency gaming systems. The attorney general gets enforcement power. Separately, SB 1992 makes it a Class E felony to deliberately influence an event outcome while holding a prediction market contract. The timing isn't great for Kalshi and Polymarket, which already face legal headwinds in other states.
EU, Belgium, Netherlands, France tighten gambling rules
The European Parliament debated a proposed EU-level gambling levy on May 20. MEP Victor Negrescu estimated it could raise €2-4 billion annually, with an operational package targeted for January 2028. Budget Commissioner confirmed the levy will be assessed alongside digital services and crypto-asset levies for the next MFF. Separately, Belgium's Kansspelcommissie and the Netherlands Gambling Authority issued formal World Cup advertising warnings to licensed operators ahead of the June 11-July 19 tournament. France's ANJ flagged a year-on-year increase of more than 25% in operator marketing budgets as the World Cup approaches. The message: no soft-pedaling on gambling enforcement during the tournament.
Senate hearing adds pressure
During a May 20 hearing titled 'No Sure Bets' before the US Senate Commerce Subcommittee, American Gaming Association CEO Bill Miller argued that prediction market contracts are backdoor betting operations bypassing state licenses and tax rules. Former Congressman Patrick McHenry defended CFTC oversight. Chair Marsha Blackburn said more sessions are planned — meaning the regulatory squeeze isn't letting up. With the circuit split widening and multiple fronts opening, prediction market operators face a messy legal patchwork that the Supreme Court may have to untangle.
