NHL’s Deal with Prediction Markets Sparks Regulatory Uproar

The prediction market industry is currently witnessing rapid growth, with platforms such as Kalshi and Polymarket leading the way in this swiftly changing environment. Kalshi, a U.S.-based prediction market, saw its notional trading volume exceed $2 billion during the week before October 2025, largely fueled by major sporting events like the MLB playoffs and NFL matchups, according to a

. This surge has established Kalshi as a significant force in a sector that is drawing interest from both individual and institutional investors, even as it faces regulatory challenges and rivalry from established online sports betting companies such as .

The National Hockey League’s recent multi-year licensing arrangement with Kalshi and Polymarket represents a notable breakthrough, making it the first major U.S. sports league to collaborate with prediction market platforms, according to a

. This agreement gives Kalshi and Polymarket access to the NHL’s exclusive data and branding, while the league benefits from enhanced customer protections. Kalshi CEO Tarek Mansour called the deal a “landmark event” for the sector and suggested that similar partnerships with other leagues may be on the horizon. The development highlights increasing institutional trust in prediction markets, which are being recognized more as legitimate financial instruments for risk management and speculation.

Yet, Kalshi’s growth has raised concerns among regulators and industry stakeholders. U.S. geolocation companies, which are responsible for ensuring compliance with location-based betting laws, have expressed worries about Kalshi’s ability to operate across the country under a Commodity Futures Trading Commission (CFTC) license without employing GPS-based verification, according to

. Firms like GeoComply and Xpoint, which supply geolocation technology to operators including DraftKings and FanDuel, contend that Kalshi’s model could undermine the lucrative compliance industry and open the door to regulatory loopholes. An ongoing legal case in Nevada, where authorities are seeking evidence regarding Kalshi’s exemption from geolocation mandates, could set an important standard for how prediction markets interact with state gambling regulations.

At the same time, DraftKings, a dominant name in online sports betting, continues to hold a strong market position despite the emergence of prediction markets. Since expanding into sports betting after the Supreme Court’s 2018 decision, DraftKings has secured a leading share in 28 states for sports betting and five states for i-gaming, as reported by GuruFocus. Analyst Bernie McTernan from Needham pointed to DraftKings’ sophisticated personalization and wide-ranging offerings as major advantages, indicating that most new prediction market participants are coming from unregulated areas rather than directly competing with established sports betting services.

The competitive and regulatory landscape for prediction markets is likely to become more complex as Kalshi and Polymarket continue to grow. Although the NHL partnership reflects greater mainstream acceptance, significant hurdles remain in aligning federal derivatives regulations with state gambling laws. For now, the sector’s expansion is being propelled by technological progress and institutional support, but its future will hinge on how regulators, lawmakers, and industry players address the shifting legal and ethical challenges.