The House Edge – CFTC vs. Michigan on Prediction Market regulations

What the house knows. Occasionally.

Issue #07 | July 19, 2026

THE LEAD

More regulatory conflict this week, and a new kind. The CFTC ordered Kalshi to keep its Michigan trades open after a Michigan judge ordered them cancelled, so a federal regulator and a state court are now giving the same company opposite orders. MGM confirmed the Diller talks are real: the board formed a special committee and JPMorgan is helping him raise the money. And Macau analysts cut their 2026 forecasts across the board just as the World Cup ended today. Earnings season starts July 22 with expectations finally low.

THE BOOK

US iGaming, Sports Betting & Prediction Markets

The CFTC tells Kalshi to ignore a state court

Background first. A Michigan judge ordered Kalshi to stop taking Michigan trades and unwind the ones it already took. Kalshi asked the CFTC for permission to comply: it filed an emergency rule to suspend Michigan access and close out Michigan positions.

On July 14 the CFTC said no. It blocked Kalshi’s rule and ordered the company to honor every executed trade. Chairman Michael Selig said canceling executed trades “risks a cascading effect on the entire marketplace,” and that a state cannot force a federally regulated exchange to break its federal obligations.

The judge did not back down. She extended the ban through August 12 and set the penalty: geofence Michigan by the end of that day or pay $120,000, rising to $500,000 per day. Kalshi says it is “reviewing” the order. It has no clean option left: obey the judge and defy the CFTC, or obey the CFTC and rack up state fines.

The rest of the board

Front	Status	Next date
Michigan	TRO extended; CFTC ordered Kalshi to keep the trades alive anyway	Geofence deadline Aug 12 ($500K/day after)
New York	Kalshi appealed its preemption loss to the 2nd Circuit the same day	Emergency relief seen as a long shot
9th Circuit (Nevada)	Ruling expected around July 15 never landed	Any day
Nevada (state court)	Contempt hearing was set for July 16; no ruling reported by press time. The state supreme court separately refused to pause the geofencing mandate	Contempt decision pending
Connecticut	Judge barred Kalshi from citing the CFTC’s own league partnerships as preemption evidence	Case proceeds
4th Circuit (Maryland)	Ruling pending	Expected by July 30
Wisconsin	AGA moved to intervene in CFTC v. Wisconsin, on the state’s side	Motion pending
Arizona	Secretary of State banned election-related prediction trading outright	In effect

Washington stirs

• The House Agriculture subcommittee holds a hearing July 21 on customer protections and market integrity in sports event contracts.
• Rep. Dina Titus called the contracts “disguised financial derivatives” in a Hill op-ed. Another House bill would require facial-recognition age checks for bettors and prediction users.
• The tribes escalated: three California tribes asked the 9th Circuit to force Kalshi off reservation land (one judge said the contracts “sound like a bet”), the Five Civilized Tribes demanded federal oversight, and CNIGA’s James Siva called prediction markets “without a doubt” the biggest threat to tribal gaming.

If you can’t beat them

• DraftKings won approval as a futures commission merchant. It can now run its prediction business in 48 states, with sports contracts live in 18.
• Robinhood now routes event contracts through Rothera, an exchange it co-owns, and keeps all the economics instead of sharing with Kalshi. Event contracts pushed Robinhood’s “other transaction revenue” to $147M in Q1, up 320% from a year ago.

The same industry fighting prediction markets in court is building its own. Whatever the judges decide, the incumbents want to own the rails.

Volume keeps growing anyway. June was the biggest month prediction markets have ever had: Kalshi did $31.5B, and the two platforms combined did $44.8B, up 75% from May. Kalshi’s $95.7B in 1H26 is already four times its entire 2025. The World Cup drove $7.4B on Kalshi before the group stage even ended. About 85% of Kalshi’s June trading was sports, and sports was roughly two thirds of Polymarket’s Q1 volume.

Month (2026)	Kalshi	Polymarket	Combined	YoY
January	$9.6B	$7.7B	$17.2B	~8x
February	$9.9B	$7.9B	$17.9B	~9x
March	$13.1B	$10.6B	$23.7B	~11x
April	$14.8B	$9.0B	$23.8B	~11x
May	$16.8B	$8.9B	$25.7B	~13x
June	$31.5B	$13.3B	$44.8B	~23x

Source: Taker notional volume at $1 per contract, per The Block and DeFi Rate. Polymarket includes its new US exchange from May ($1.8B May, $3.0B June). YoY is approximate: no consistent public monthly series exists for early 2025, when the platforms ran near $1B each per month (Kalshi’s entire 2025 was $23.8B, and combined volume was still under $5B a month as late as September 2025). Not comparable to sportsbook handle.

The tournament reset the scale. Bloomberg’s puts prediction markets at 27% of sports bets during the World Cup.

Color from the week

• Michael Burry’s positions got detail: long Flutter and DraftKings, roughly 60/40. Analysts read it as a bet that states eventually tax prediction markets like sportsbooks.
• DraftKings sued Philadelphia in federal court to stop the city’s probe into its promotions and VIP programs.
• FanDuel put another $7.5M into the industry’s Win for America super PAC, taking its total to $27M. The trajectory is the point: the PAC raised $41M in Q1 (FanDuel and DraftKings gave $19.5M each per FEC filings), passed $48M by April as Bet365 joined, and had spent $20M+ on statehouse primaries in six states by spring, routed through state PACs with neutral names like American Conservatives Fund. BetMGM is the notable holdout.
• A Pennsylvania commission recommended banning live in-game betting outright. Advisory only, but in-game is most of modern handle, and the idea is now in print in a top-three state.

So what? Until this week the fight was companies versus states. Now the federal regulator is in open conflict with state courts, and only the Supreme Court or Congress can settle that. Watch August 12: if Kalshi geofences Michigan to avoid the fines, every state AG gets a template. If it obeys the CFTC instead, a state judge decides whether to hold a company reportedly valued between $40B in contempt.

THE ORIENT

Macau & Asia

Analysts caught up to the demand story. CLSA cut 2026 growth to 2%, Jefferies to 5%, and JP Morgan sits 8-10% below consensus on Sands China and MGM going into earnings. Citi still expects July at MOP21.0B (down 5%), and its channel check shows daily GGR improving to MOP621M as the match schedule thinned.

Where the softness sits. New DICJ data shows 2Q VIP baccarat fell 18.8% from 1Q (down 2.6% YoY) while mass rose 0.8% and slots grew 17%. Total GGR came in flat at MOP61.0B, the lowest quarter since 1Q25. The weakness is at the top end, which fits the money-flow scrutiny from last week’s issue: DICJ met all six concessionaires this week about illegal livestreaming used for proxy betting. 1H26 arrivals rose 9% to 20.9M, but June fell 3.1% y/y, and day-trippers (+15.3%) are growing far faster than overnight guests (+0.2%).

Korea: the policy risk shows up. Seoul may raise the tourism levy on foreigner-only casinos from 10% of revenue to 15%, a KRW30-50B (US$20-35M) annual hit to the six biggest venues, including Paradise City, Walkerhill and Seven Luck. Jeju is exempt.

Singapore joins the soft patch. JP Morgan models Marina Bay Sands 2Q EBITDA down 5% to US$727M, the first decline since the US$1B room upgrade started paying off, with 1H Singapore arrivals down 1.7%.

MGM China positions for the Diller endgame. The parent-level news this week, per the WSJ: MGM’s board formed a special committee with advisers to evaluate People Inc.’s $48.30 offer, and JPMorgan is helping Diller line up financing.

Brief items

• Okada Manila’s 2Q EBITDA fell 71% as VIP hold halved. An ugly print for Universal Entertainment.
• PAGCOR says it will decide by August whether to privatize its self-operated casinos.

So what? Macau demand continues to be soft across the board with VIP down from 1Q. Earnings open July 22 with expectations already low; what Sands says about reinvestment and share matters more than the print.

THE OLD WORLD

Europe + Canada

Suppliers: one up, one sideways

• Playtech jumped 22% after raising full-year EBITDA guidance to at least €270M (consensus was €205-225M), powered by Hard Rock Digital.
• Evolution settled the UK Gambling Commission’s black-market review for £4.75M and let its $85M Galaxy Gaming acquisition lapse. Q2 revenue fell 1.2%, though Europe grew sequentially for the first time in several quarters.

Germany loosened, a first. Germany’s regulator raised online slot stake limits for the first time under the current treaty: €3 per spin, or €5 for players with a clean 90-day history, versus the old €1 cap, with mandatory behaviour tracking attached. Licensed channelisation sits in the mid-double-digits, so this is a regulator choosing to win players back with product rather than keep losing them to the black market.

Prediction markets, Europe edition

• The Czech Republic ordered internet providers to block Polymarket.
• Italy blocked Polymarket a second time, putting its €19M Lazio shirt sponsorship at risk.
• The Dutch regulator rejected Polymarket’s appeal against its gambling designation.
• Gibraltar went the other way: Europe’s first dedicated prediction-market licensing framework took effect July 13.
• Spain’s proceedings from last week’s issue: no new development.

Canada. Alberta launched regulated iGaming on July 13 with 22 sites live on day one, Canada’s second open market after Ontario. Ontario’s gaming minister Stan Cho resigned over expense claims; Attorney General Doug Downey, an architect of the iGaming framework, takes over mid-review.

So what? Germany handing licensed operators product back is the rare European regulatory tailwind, a direct revenue lever for German-licensed books (Tipico, bwin, Merkur) into 2H. And file the French thread: if online casino legalization lands, Banijay is pre-assembled for it, on FDJ’s home turf, and this week’s disclosures finally put numbers on what it is building.

THE LOCAL

US Regional Gaming & Deal Watch

Caesars: the $33 bid went nowhere. The go-shop closed with no rival offer, and Icahn never made his $33 formal. From here the deal is a timeline:

Date	Milestone
May 28	Board accepts Fertitta’s $31/share, $17.6B take-private ($11.9B debt assumed)
Jul 8	Fertitta executives clear the Nevada Gaming Control Board
Jul 11	Go-shop expires with no superior proposal
Jul 13	HSR antitrust filing
Jul 23	Nevada Gaming Commission suitability votes
~Late Aug	Remaining state gaming applications due (45-day window)
Next 9-10 months	State approvals, SEC-reviewed proxy, shareholder vote
~2Q27	Expected close

One line beyond the table: Tilman Fertitta stepped down as director and president of the acquisition vehicle under government-ethics rules tied to his ambassadorship, with Paige Fertitta now president (see THE SHIFT).

June state scoreboard. The mid-country regionals ground out a fine month:

State	June GGR	YoY
Pennsylvania	$536.2M	Slight dip
Louisiana	$216.4M	+7.6% (+1.1% excluding Bally’s Baton Rouge’s move onto land)
Mississippi	$194.6M	-1.5%
Illinois	$173.6M	+9.1%
Missouri	$164.2M	+1.8%
Iowa	$138.6M	+1.2%

Deals and machinery. Louisiana approved Bally’s purchase of Sam’s Town Shreveport from Boyd; it becomes Bally’s Shreveport North, next door to Bally’s existing casino. Texas Capital pitched Boyd as cheap: growth across all divisions by 4Q and a stock nearly three turns below its usual multiple, with the Caesars and MGM bids resetting what control of regional cash flow is worth. And Nevada moved to cut the minimum progressive-slot contribution rate from 0.4% to 0.1%, a 1999 rule, so Nevada casinos can join multi-state jackpot networks.

So what? In the regionals, June comps grinding positive while Bally’s consolidates Shreveport says the mid-country consumer is holding up. Boyd at three turns below its usual multiple is where the value screen points if the deal wave continues.

THE PROJECTS

Global Greenfield & Development Watch

• Wynn Al Marjan (UAE). Wynn reaffirmed the 2027 opening after a modest delay from the original Q1 2027 target; GGR forecast of up to US$1.66B.
• Playtech won a UAE gaming-vendor license this week. Truist stays at Buy with a $125 target.
• Ho-Chunk Beloit (Wisconsin). The $705M casino targets first-phase completion by end of August and a tentative September opening, 17 miles from Rockford. New competition on the Illinois-Wisconsin border.
• Japan. Quiet. No supplier followed Konami’s first-mover license filing, and there was no Osaka construction news. The licensing race from last week’s issue is still a one-horse

OTHER

Sweepstakes & Skill Games

Sweepstakes. Arizona sent cease-and-desists to unlicensed sportsbooks and sweeps sites, the week’s only new state enforcement; the C&D wave Indiana promised hasn’t surfaced yet. Amazon agreed to pay more than $200M to settle a class action over hosting social casino apps.

THE SHIFT

Moves & Shakers

• Fertitta Entertainment: Tilman Fertitta stepped down as director and president of the Caesars acquisition vehicle under government-ethics rules; Paige Fertitta named president, with the board now Richard Liem, Steven Scheinthal and Paige Fertitta.
• Accel Entertainment: Mark Phelan takes the CEO seat in August; Stan Guidroz promoted to COO.
• Ontario: Gaming minister Stan Cho resigned over expense claims; Attorney General Doug Downey holds the file mid-review.
• **Crypto.com:** Prediction-markets chief Chris Fargis exited, a week after Citadel Securities’ $400M investment valued the company near $20B.
• Kalshi: Hired a former Underdog executive. DFS talent keeps moving to prediction markets.

THE NUMBER

$27M is what FanDuel alone has now put into the sportsbooks’ Win for America super PAC, after another $7.5M this week. The industry’s midterm war chest passed $48M by spring and keeps growing. That is the sportsbooks pricing the prediction-market and tax threat in the only currency legislatures understand.

THE CALENDAR

Date	Event
July 20	Macau’s post-World Cup demand read begins
July 21	House Agriculture subcommittee hearing on sports event contracts
July 22	Las Vegas Sands Q2 opens Macau earnings season (Sands China, MBS)
July 23	Nevada Gaming Commission: Fertitta suitability votes, Caesars/MGM shelf approvals, Venetian’s $7.2M settlement
July 29	MGM Q2 (forced disclosure point on the Diller talks); FDJ Q2
~July 30	4th Circuit ruling expected, Kalshi v. Maryland
July 31 / Aug 3	Flutter’s last LSE trading day / delisting
Aug 1	Minnesota prediction market ban effective
Early Aug	Flutter Q2 update; Bally’s LVCVA financing deadline
Aug 12	Kalshi’s Michigan geofencing deadline ($500K/day after)
Aug 13	Entain interims; Rank prelims
Any day	9th Circuit ruling, Kalshi v. Nevada (overdue)
~October	Pennsylvania skill-games enforcement stay expires