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German B2C and B2B transactional portals run on the framework we are developing! US prediction markets regulatory developments and iGaming
US Prediction Markets Regulatory Developments are moving quickly from niche debate to front-page policy, and the ripple effects are landing squarely on iGaming, sports betting, and digital advertising. In early January 2026, two signals arrived almost simultaneously, a new House bill aimed at prediction market insider trading by public officials, and a Google Ads policy update that opens the door to prediction market advertising, but only for tightly defined, federally regulated players.
Together, these updates show a market growing faster than the rules around it, and an industry wrestling with the most uncomfortable question prediction markets can raise, what happens when wagering intersects with governance, national security, and public trust.
A House bill puts prediction market insider trading on the agenda
On 8 January 2026, reporting detailed a newly introduced bill in the US House of Representatives that would restrict government employees from participating in prediction markets when they have access to information not available to the general public. The proposal was introduced by Rep. Ritchie Torres of New York and is formally titled the Public Integrity in Financial Prediction Markets Act of 2026.
The bill is explicitly designed to cover more than just direct possession of sensitive information. It also applies to employees who may reasonably obtain nonpublic material through their official duties. That scope matters, because it indicates lawmakers are thinking about informational asymmetry as a structural feature of government roles, not merely a matter of individual misconduct.
Covered individuals include elected officials, political appointees, and executive branch employees. The intent is clear, public servants should avoid financial participation in markets where privileged access could undermine confidence in both the market and the institution.
The Maduro contracts that triggered scrutiny
The bill arrives in the wake of high-profile trading activity connected to the arrest of Venezuelan President Nicolás Maduro. According to the report, a prediction market user reportedly earned more than $400,000 on platforms offering contracts related to Maduro’s removal from power, shortly before an operation carried out by US forces.
Wagering volume around the event was significant. Users collectively wagered tens of millions of dollars on contracts tied to Maduro’s ouster, with approximately $56.6m staked on Polymarket alone. Across Polymarket and Kalshi, total wagers linked to Maduro-related propositions reached roughly $64.3m.
One account, created in December and operated by an unidentified user, placed $32,537 on the outcome and realised profits exceeding $400,000 when the event materialised. Not every related contract paid out, Polymarket confirmed it is not paying on a “Venezuelan invasion,” stating the US did not invade the country.
Price discovery versus public trust is the core regulatory fault line
The Maduro episode reignited a long-running industry argument about whether insider trading principles should apply to prediction markets. Some participants argue insider knowledge improves price discovery, meaning informed traders can push markets toward truth faster, rather than distort outcomes.
This pro-information view has been repeated in public commentary from industry observers, including a social media post cited in the reporting, and it has also been echoed by anonymous early pioneers of prediction markets who suggested to NEXT.io that privileged access is not a systemic problem.
But critics see the same behavior as corrosive. When prediction markets overlap with foreign policy or national security outcomes, the question stops being purely economic and becomes institutional. If the public believes officials or those adjacent to officials can profit from operational decisions, then market accuracy may not be enough to preserve legitimacy.
The hidden iGaming story is handle migration and changing customer wallets
Beyond ethics, the expansion of prediction markets is now being measured for its direct effect on legal sports betting. Research conducted by Jordan Bender of Citizens examined approximately 1 million transactions from users who participate in prediction markets alongside other wagering activity.
The analysis used cross-operator wallet data supplied by Juice Reel, which aggregates real cash wagering activity across regulated sportsbooks, offshore operators, daily fantasy sports, and other betting channels. Importantly, the data reflects individual customer wallets rather than liquidity provider or market maker volume, which makes the findings especially relevant for operators thinking about player value and retention.
Citizens found that prediction markets are contributing to mid-single-digit cannibalisation of the legal sports betting industry. Bender estimates that about 5% of regulated sports betting handle, around $8bn on an annualised basis, has shifted into prediction market platforms.
That figure will land differently depending on where you sit. For sportsbook-first operators, 5% handle leakage is material. For multi-vertical ecosystems, it may be a signal that consumers are simply adding another wagering format to their routine.
Substitution is real but displacement is not total
The same Citizens work adds nuance that gets lost in headline panic. While overall wallet allocation to traditional gambling declined 11% within 90 days of a user’s first prediction market bet, overall wallet size increased 9% over the same period.
In plain terms, prediction markets appear to trigger partial substitution, but also expansion of total spend. For iGaming strategists, that suggests a familiar pattern, when new formats enter the market, heavy users may reshuffle categories while still increasing total entertainment expenditure.
Corporate impact also looks uneven. Citizens suggests that DraftKings, FanDuel and Fanatics, all of which have launched or integrated their own prediction market offerings, are largely insulated. Meanwhile, operators without prediction market exposure, including theScore, Rush Street, BetMGM, Caesars, and bet365, face modestly negative implications, according to Bender.
Kalshi growth shows momentum and a regulatory puzzle
Kalshi’s recent numbers illustrate why this category is getting political attention. Citizens notes the platform’s trading volume was around $6bn in both November and December, up from less than $1bn prior to the football season.
Marketing intensity helped fuel that growth. External campaigns across television, radio, and digital media coincided with 3.1 million app downloads over four months, including 1.3 million in December alone, according to Bender’s analysis.
Yet the growth curve is not a simple straight line. Despite integrations with brokerage platforms and major media outlets, month-over-month volume growth in December was limited to 3%, diverging from historical sports betting seasonality patterns. That divergence hints at a different engagement profile than traditional sportsbooks, and possibly a faster saturation point among early adopters.
Geographically, prediction market activity is concentrated in states such as New York, New Jersey, California, Washington, and Ohio. The report notes that larger bet sizes from frequent users skew the data, which is typical in markets that rely on more financially engaged participants.
Average wager size underscores that behavioral split. Prediction market platforms saw average wagers of $185, compared to $55 at regulated sportsbooks, $78 offshore, $62 through bookies, and $33 in daily fantasy sports. In iGaming terms, this looks less like mass-market micro-betting and more like a higher-stakes trading mindset.
Google opens the ad gates but only for federally regulated prediction markets
On 5 January, Google announced it will permit advertising for prediction markets on Google Ads starting 21 January. The 16-day window between announcement and enforcement is notably shorter than Google’s typical 30 to 90-day transition periods for major policy changes.
The compressed timeline suggests Google believes either regulatory clarity has improved, or the pool of compliant advertisers is already small and prepared. Either way, it is a meaningful shift for an industry where distribution is often decided by platform policy as much as by law.
Crucially, this is not a broad liberalisation. Access is restricted to federally regulated entities under the oversight of the Commodity Futures Trading Commission or the National Futures Association. Google’s definition frames prediction markets as platforms facilitating access to exchange-listed event contracts tied to economic indicators, sports outcomes, or current events, and distinguishes them from gambling or speculative retail trading products.
Two narrow eligibility lanes and a clear compliance moat
Google’s policy limits eligibility to two categories, platforms authorised by the CFTC as Designated Contract Markets whose primary business is listing exchange-listed event contracts, and brokerages registered with the NFA that provide third-party access to contracts listed by qualifying DCMs. Both must be certified by Google before ads can run.
This structure is a strategic filter. It creates a compliance moat that effectively blocks unregulated or entertainment-focused operators from paid search and paid media scale on Google. For the iGaming sector, it is a reminder that ad access increasingly depends on regulatory posture and product classification, not just creative and budget.
What stays prohibited and why it matters for iGaming adjacent brands
Google explicitly excludes adjacent products, including binary options and fixed-return all-or-nothing payout contracts. It also continues to prohibit online gambling markets involving games of chance or lotteries that are not permitted under local law as regulated prediction markets.
Informational or educational sites offering signals or advice related to trading exchange-listed event contracts are also barred from advertising. That clause matters for affiliates, media, tipsters, and “how to trade” content sites that might have expected to benefit from a looser regime.
Enforcement risk is high. Google states violations in regulated categories are treated as severe and it may suspend accounts immediately upon detection. This mirrors how Google treats other sensitive verticals like gambling and cryptocurrency, and it means compliance errors can become existential for growth teams.
What these developments mean for operators, affiliates, and regulators
For iGaming and sports betting leaders, these two developments read like a market entering its second act. The first act was product experimentation and consumer adoption. The second act is rulemaking, platform gatekeeping, and reputational risk management.
- For regulated operators, prediction markets are now a competitive feature set, either via direct offerings or partnerships, because handle migration is measurable and not just theoretical,
- For operators without exposure, the Citizens estimates create pressure to decide whether to build, buy, partner, or differentiate away from event-contract style engagement,
- For affiliates and media, Google’s policy is a structural constraint, because many adjacent education and signal products remain non-advertisable, limiting scalable acquisition paths.
Regulators face an even harder balance. The House bill aims to protect public integrity by limiting government participation where informational advantages exist. That is a governance-first approach, and it responds directly to the reputational damage that can occur when markets appear to intersect with sensitive operations.
At the same time, the ad policy shift shows that major platforms are willing to legitimize prediction markets when they are clearly housed within federal financial oversight. In other words, the direction of travel appears to be permissioned growth for a small set of compliant entities, and increased scrutiny for everyone else.
The bigger narrative is convergence with higher stakes
Prediction markets are converging with iGaming, not just because both monetize uncertainty, but because both are increasingly shaped by compliance infrastructure and distribution access. The Citizens data shows real wallet behavior shifts, including an estimated 5% handle migration and higher average wager sizes on prediction markets than on sportsbooks.
The political reaction shows the category can collide with governance in ways sports betting usually does not. When contracts touch foreign leaders, arrests, or national security outcomes, the social acceptability bar rises fast, and legislative interest follows.
Meanwhile, Google’s rules give a preview of where marketing power will concentrate. If only CFTC and NFA aligned entities can advertise, customer acquisition at scale may tilt toward a narrower set of platforms, while iGaming brands watch from the sidelines unless they can participate through compliant structures.
In 2026, the question is no longer whether prediction markets will be part of the digital wagering landscape. The question is which versions of them will be allowed to scale, who will be trusted to operate them, and how the iGaming ecosystem adapts as regulation and distribution increasingly determine winners.
