Money Transmission Issue Looms For Prediction Markets

Manatt Partners and and Associates and co-authored a Law360 article examining how conflicting federal court decisions on prediction market event contracts could reshape money transmission compliance obligations for platforms operating nationwide.

The authors explain that whether these contracts are ultimately treated as CFTC-regulated derivatives or state-regulated gambling products may determine the scope of federal registration, anti-money laundering and state licensing requirements. As they note, “Gaming law preemption is only part of the regulatory analysis.”

The article explores the implications of the growing circuit split involving Kalshi and outlines the potential regulatory paths facing prediction market operators. The authors also provide practical guidance for navigating uncertainty, including building robust compliance programs, evaluating state-by-state licensing obligations and preparing for additional scrutiny from both federal and state regulators.

Law360 subscribers can read the full article .