Betting or Trading? Prediction Markets' $1.1bn Week Ends in Court

In the space of a single week, prediction markets — platforms where you “trade” contracts on whether real-world events will happen — attracted a billion-dollar acquisition from a FTSE 100 company and a lawsuit from the State of New York calling the whole model illegal gambling. Both things are true at once, and that contradiction is the story.

The deal: a trading giant buys into sports predictions

Per iGaming Business and SBC News, London-listed trading platform IG Group has agreed to acquire Underdog — the US daily-fantasy-sports operator that moved into sports prediction markets in September 2025 — in a deal valuing the company at $1.1 billion, rising to as much as $1.3 billion if Underdog hits its 2026 revenue and profitability targets. That price is about 2.4 times Underdog’s $466 million revenue for the twelve months to June 2026, and iGB reports IG has lined up a bridge facility of up to $950 million with Barclays and Goldman Sachs to fund it, with completion expected in late 2026 or early 2027.

The names involved tell you how seriously the gambling industry proper is taking this. IG’s chief executive is Breon Corcoran — previously the boss of Paddy Power Betfair, one of the biggest betting companies in the world — and iGB notes he has history with Underdog’s founder Jeremy Levine, having bought Levine’s previous fantasy-sports app for Paddy Power back in 2017. Levine’s own framing, per iGB: “the future of prediction markets is going to be about sports.” IG says the acquisition would more than double its US revenues and grow its US customer base more than tenfold.

The lawsuit: New York says this is just gambling

The very same week, the Guardian reports, New York’s governor and attorney general sued Kalshi — the sector’s most prominent platform — alleging it runs an illegal, unlicensed gambling operation. The state’s argument is blunt: users are staking money on uncertain events they cannot control, which is the legal definition of a bet; Kalshi holds no licence from the state gaming commission; it avoids the taxes licensed sportsbooks pay; and, the suit alleges, it accepts customers aged 18 to 20 in a state where mobile sports betting requires you to be 21. The suit seeks forfeited profits, restitution and fines equal to three times profits.

Kalshi’s response, per the same report: it is a federally regulated exchange under the Commodity Futures Trading Commission, states cannot simply shut it down, and pushing it out would only drive New Yorkers offshore. That is the entire fight in miniature — the platforms say “we are a financial market, like stocks”, the state says “you take bets, so you are a bookmaker”, and the courts now get to decide which sentence wins.

Why this matters to players — including here

This is not just an American argument. The Guardian reported back in May that US prediction platforms were already offering markets on Australian elections — and online gambling law in Australia is one of the beats this site covers. Neither Kalshi nor Polymarket is approved by Australian regulators and both say they do not accept Australian users, but experts told the Guardian the sites can be reached with a VPN, and Australia’s media regulator ACMA has already ordered internet providers to block Polymarket. So the practical question for a reader is what protections travel with your money, and the honest answer today is: fewer than with a licensed bookmaker. The New York suit itself catalogues the gap — different age floors, no gaming-commission oversight, no contribution to the problem-gambling funding that licence fees pay for. The platforms dispute the framing, not the mechanics.

Our position is the same one we apply to every operator on this site: the label matters less than the licence. Whether a product calls itself a sportsbook, an exchange or a prediction market, the questions that protect you are identical, and they are the same licence checks we run on every casino — who regulates it, what age and identity checks it runs, where disputes go, and what happens to your balance if the law moves against it mid-trade. A billion-dollar acquisition says smart money expects this sector to grow; a state lawsuit says the rules it will grow under are genuinely unsettled. Both can be true, and until the second one resolves, treat prediction markets as what they are right now: a fast-growing product with an unfinished rulebook.

Update (4 November 2026): the fight moved to federal court, and other states followed

New York’s case has not been decided. Kalshi removed the lawsuit from the New York state court to the federal court in Manhattan (the Southern District of New York) on the day it was filed, 31 July, the court docket shows. The Attorney General asked on 7 August for the case to be sent back to state court; Kalshi opposed that on 21 August, arguing, per ReadWrite, that the claims “necessarily raise disputed and substantial federal law issues”. The State’s final brief went in on 28 August. As of the latest docket entries we checked (30 October, a joint letter about an Attorney General subpoena to Kalshi), the judge had not ruled on where the case will be heard, let alone whether Kalshi is running illegal gambling.

The pressure has spread beyond New York. On 28 October Utah filed criminal charges in state court in Salt Lake City against Kalshi and its co-founders, Tarek Mansour and Luana Lopes Lara, including 12 counts of online gambling promotion, the Deseret News reported. The Commodity Futures Trading Commission has in turn sued Utah, arguing that federal law overrides state gambling law as applied to event contracts.

We found no report that the IG–Underdog deal has completed. When it was announced, completion was expected in late 2026 or early 2027, subject to regulatory and antitrust approvals. In the meantime IG has told investors it plans a UK prediction markets product as early as the fourth quarter of 2026, and SBC News reports it has applied for a Gambling Commission betting licence for it. In the UK, at least, the product is heading for a gambling regulator.

None of this changes the advice above. Until a court settles the question, a prediction market account does not come with the protections of a licensed bookmaker.

We will update this piece as the New York case and the IG deal progress, and correct anything that moves.