09-02-2026 
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Prediction markets Kalshi and Polymarket continue to raise funds at ever-higher valuations, even as United States federal courts keep rejecting their ‘it’s not sports betting’ arguments.
- Kalshi, Polymarket raising more cash, Don Jr. raising eyebrows with warning to state AGs
- Ninth Circuit rejects Kalshi’s ‘not sports betting’ argument
- Kalshi bans fabulist George Santos from platform for life
- CFTC fines Trump’s teleprompter guy, more military insider charges coming
- Can Apex help customers remember the lifeless Gemini Titan?
Last month, Kalshi reportedly began talks with venture capital group Sequoia Capital and asset managers Wellington Management on yet another funding round, this one looking to raise $750 million at a valuation of $40 billion. It was only three months ago that Kalshi raised $1 billion at a $22 billion valuation—and Kalshi’s valuation was just $2 billion in June 2025—so clearly someone sees a future in them thar prediction markets.
Not to be outdone, the Wall Street Journal reported Monday that Kalshi rival Polymarket is negotiating its own funding round, looking to raise $1 billion at a valuation of $21 billion. Leading this round with a $300 million position is 1789 Capital, which boasts Donald Trump Jr. as a partner.
1789 previously took a $200 million stake in Polymarket, so this topped-up position would make 1789 one of Polymarket’s largest stakeholders. That said, it’s still well behind the $1.6 billion stake held by the New York Stock Exchange’s parent company, Intercontinental Exchange Inc (NYSE: ICE).
Don Jr. also serves as an adviser to both Kalshi and Polymarket. In June, the Financial Times reported that Kalshi had given the president’s son $300,000 worth of equity in the company when he joined its advisory panel last year. Remember, Kalshi was valued at $2 billion at the time, and with that valuation having since ballooned 20x, Don Jr.’s stake has also appreciated.
All this skin in the game is reportedly leading Don Jr. to take increasingly brazen steps to ensure prediction markets are allowed to continue offering sports bets to Americans without having to obtain state-issued sports betting licenses.
Last week, the New York Times reported on a March meeting of Republican state attorneys-general in New Orleans, where Don Jr. was an invited speaker. During a Q&A session, the president’s son told the AGs in attendance that gambling operators with a “vested interest” in the status quo were using state-level prosecutions of prediction market operators to protect their “monopolies.”
Don Jr. reportedly argued that prediction markets didn’t need gambling licenses because they’re already subject to oversight by the Commodity Futures Trading Commission (CFTC). As CFTC-registered designated contract markets (DCMs), prediction markets offer ‘sports event contracts,’ not sports wagers. The Times added: “Mr. Trump’s tone was friendly, the people said. But his comments … dovetailed with a message his father’s administration has sent to state leaders: Back off.”
In April, President Donald Trump claimed to know “some people that are very smart” who are “in the prediction market business, and they’re pretty happy with it.” The president went on to offer his standard argument about any aspect of technology, namely, that if American companies don’t offer it, other countries will, and America gets “left out in the cold.”
Whatever his intentions in speaking to the GOP AGs, Don Jr.’s comments have underscored Senate Democrats’ arguments for revising their digital asset market structure bill (the CLARITY Act) to include ‘ethics’ language addressing conflicts of interest involving public officials and their families profiting from crypto ventures. (Prediction markets lean heavily on digital assets for customer account funding/payouts and have been credited with helping to introduce sports bettors to the wonders of crypto.)
Tribal gaming operators have also pressed for CLARITY revisions that would declare sports betting to be off-limits for prediction markets. And surveys have shown that a plurality of Americans believe prediction markets are gambling platforms.
Ninth Circuit not buying what Kalshi’s selling
In July, a coalition of 44 state attorneys-general informed the CFTC that the regulator’s plan to explicitly authorize sports-based ‘event contracts’ was “beyond the CFTC’s statutory powers, is in tension with the Constitution, and would otherwise be arbitrary and capricious in its current form.” The AGs urged the CFTC to instead “clarify that sports bets and gambling cannot be traded on DCMs, but are instead subject to state law.”
The CFTC has sued nine states for daring to challenge prediction markets’ right to offer sports bets to the residents of those states. Many states restrict wagering to adults over 21 years, whereas prediction markets accept action from anyone 18 or older. Some states don’t allow betting at all, and yet prediction markets accept customers from those states.
But while the platforms have won a few legal skirmishes, the vast majority of rulings have sided with the states. In response, the CFTC under Chairman Michael Selig—who reigns unchallenged by the four commission seats that have remained empty for a year as of September 3—has used its ‘emergency authority’ twice in a 30-day span by ordering Kalshi to ignore court orders in Michigan and New York. The regulator previously exercised this authority only four times in its history and hadn’t done so at all since 1980.
The states chalked up another win on August 28, when a three-judge panel of the U.S. Ninth Circuit Court of Appeals unanimously rejected Kalshi’s appeal of a lower court ruling in Nevada.
Nevada gaming regulators had sent Kalshi a cease and desist order for offering sports contracts to Nevada residents without a state gaming license. A District Court originally granted Kalshi a preliminary injunction against this order, but later dissolved the injunction based in part on growing pushback in other courts against the CFTC’s bid to override state law.
The Ninth Circuit panel concluded that the lower court’s dissolution of the injunction was not an abuse of its discretion, in part because Kalshi “has not shown a likelihood that the CEA [Commodity Exchange Act] pre-empts state gaming regulations as applied to its sports event contracts.”
More to the point, the panel said Kalshi’s arguments that its sports event contracts aren’t sports betting were “unpersuasive” and “distinctions without differences.” The panel noted that Kalshi’s sports event contracts “have the hallmarks of sports betting. Indeed, Kalshi advertised itself as ‘the first app for legal sports betting in all 50 states.’ And sports betting is a quintessential form of gambling.”
The panel notes that the CEA was enacted, in part, to hedge risks involving commodity prices, interest rates, etc. But Kalshi’s sports contracts “do not help institutions or investors hedge against risk; they create risk, largely for ordinary consumers, where none previously existed.” (Emphasis added.)
The panel similarly rejected Kalshi’s claim (supported by the CFTC via its emergency authority) that geofencing state customers put the company in the impossible position of upholding both state law and the CEA. The panel called this argument a “false, all-or-nothing proposition.” The panel also “found no evidence” that the CFTC planned to impose any punishment on Kalshi for complying with Nevada’s gaming laws.
Also, Kalshi’s “broad definition” of what constitutes a swap under the CEA “lacks a limiting principle.” Kalshi’s definition of swaps “encompasses off-DCM transactions, yet the CEA makes it unlawful to enter into ‘swaps’ outside of a DCM.” As such, “anyone who places an off-DCM sports bet,” including at Nevada-licensed sportsbooks, “would be violating the CEA.”
Finally, Kalshi’s arguments “raise concerns under the major-questions doctrine,” aka the legal theory that legislators, not government agencies, are better equipped to deal with substantive differences of opinion on major issues.
Nevada Gaming Control Board Chair Mike Dreitzer was understandably pleased with the Ninth Circuit ruling, saying it “completely vindicates what we have been saying all along.” A Kalshi spokesperson said the company would seek “further review” of the ruling.
A CFTC spokesperson pointed to the April ruling by the Third Circuit Court of Appeals that split 2-1 in favor of Kalshi’s argument that New Jersey couldn’t enforce its gambling rules against the platform’s CFTC-approved swaps. The CFTC claims the U.S. Supreme Court must now resolve these opposing rulings, which is where this argument was always headed.
Kalshi’s insistence on doubling down on its ‘not gambling’ arguments reflects the existential threat that a potential ban on sports contracts poses to its viability. On August 29, nearly 60% of Kalshi’s $1.9 billion in volume came from its ‘combos’, which sports bettors refer to as ‘parlays.’
The ‘summer of George’ is well and truly over
Meanwhile, prediction markets continue to deal with the fallout from insiders using privileged information to make a bank on their platforms.
On Monday, Kalshi announced that it had imposed a lifetime ban on George Santos, the former Republican representative for New York who was booted out of Congress in 2023 after being indicted for (and later convicted of) financial fraud and identity theft.
More recently, Santos was caught trading on a Kalshi market about who would or wouldn’t be attending the February 2026 State of the Union address, while posting false information on his social media accounts to move the market odds in his favor.
Kalshi said Santos failed to cooperate with its probe into the affair, so it’s “permanently suspending” Santos from “direct or indirect access” to its platform, while also imposing a penalty of $71,356.Santos appears unrepentant, issuing a Monday tweet that sarcastically thanked Kalshi for the ban, adding “Let’s see how much longer you guys are around for,” followed by a lipstick-kiss emoji.
Santos also tweeted that Kalshi “is such an serious company it violates its own notices and deadlines lol.” Santos claimed that Kalshi gave “us” 30 days advance notice of the ban on August 7 but “leaking and attention seeking seems to be the M/O of this organization. Pathetic!”
In July, the CFTC reached a settlement with Santos that required him to disgorge the $17,569.98 profit he made via its Kalshi market manipulation, plus a $17,500 monetary penalty. Santos, who admitted no wrongdoing, was also banned from trading for three years.
Shock and aw, crap
On August 28, the CFTC announced a similar settlement with Gabriel Perez, President Trump’s former teleprompter operator, who made multiple wagers via Kalshi on ‘mention’ markets related to what words/phrases Trump might use in his speeches.
The settlement requires Perez to disgorge the over $107,000 in profits he made from these insider trades, along with a penalty of $65,000. The penalty was subject to a “substantial discount” due to Perez’s “exemplary cooperation” with the CFTC’s investigation. Perez, who was fired after the revelations came to light in July, also received a three-year trading ban.
In April, the Department of Justice (DOJ) filed multiple charges against a Special Forces soldier accused of using inside info about the U.S. military’s January 3 operation to arrest/extradite former Venezuelan president Nicolás Maduro. In May, the DOJ filed charges against a Google (NASDAQ: GOOGL) employee for engaging in similar insider shenanigans to collect a $1.2 million profit.
On August 27, the Wall Street Journal reported that other charges are expected to be filed against multiple individuals, including another military member who made over $1 million on Polymarket betting on U.S. strikes on Iran and Venezuela. Another case involves an employee at accounting/consulting giant KPMG who allegedly bet on whether a public company’s quarterly earnings would beat analysts’ expectations.
It’s worth remembering that Gannon Ken Van Dyke, the Special Forces soldier charged in April, was rumbled in part because he moved money on and off Polymarket via digital wallets using the USDC stablecoin issued by Circle (NASDAQ: CRCL). Their Poly accounts might be anonymous, but the blockchain is only pseudonymous, and the digital bread crumbs can leave a trail right to your door. Proceed accordingly, or join Santos in the sin bin.
Gemini looks to Apex to boost prediction market
Gemini Space Station (NASDAQ: GEMI), the digital asset exchange turned prediction market run by Cameron and Tyler Winklevoss, lost about $217 million in the first half of 2026. Despite serious hype, Gemini’s new prediction market product (Gemini Titan) added just $500,000 to Q2’s total revenue of $45.5 million.
But help may be on the way. On August 24, Gemini announced it had signed a letter of intent with Apex Fintech Solutions to make Gemini Titan “the exclusive regulated venue for crypto event contracts distributed through Apex’s Futures Commission Merchant (FCM) to Apex’s brokerage customers.”
Basically, Gemini will handle execution and clearing for brokerage customers looking to place bets on crypto event contracts. Gemini claims the deal could eventually expand beyond digital assets to other products like “sports, economics, and financial markets.”
The plan builds on July’s deal between Gemini and another Apex subsidiary, Apex Clearing Corporation, under which Gemini customers in some U.S. states got access to stock trades with 0% commission, with Apex handling custody and clearing.
Cameron Winklevoss trotted out his usual lines about predictions being “the future of markets” and the Apex deal making Gemini’s future all the more golden. Apex Fintech’s digital markets chief, Travis McGhee, said the partnership “is about building the bridge between traditional finance and what’s next. Our brokerage clients get regulated access to crypto event contracts without having to build the plumbing themselves. That’s the Apex model.”
Gemini Titan received its DCM diploma from the CFTC last December. In April, another Gemini offshoot, Gemini Olympus, received a derivatives clearing organization (DCO) license from the CFTC, bringing derivatives clearing/settlement for Gemini Titan in-house.
Following its dire Q2 results, Gemini’s shares were trading at ~$3.50, but the stock rallied over the following week to peak at over $4.70. However, the stock closed Tuesday at $4.16 (-7.5%), mirroring the decline in the broader digital asset sector as word of new U.S. military strikes against Iran spoiled the mood.
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