Image credit: Shutterstock
Key Takeaways
- Polymarket crossed $1 billion in annualized revenue within six weeks of lifting its U.S. waitlist, aided by World Cup trading volume.
- The platform signed exclusive deals with MLB and the ATP Tour while raising capital at a valuation above $20 billion.
- Twenty states and 44 attorneys general argue the platforms are unlicensed sportsbooks, and a Ninth Circuit ruling has created a circuit split likely headed to the Supreme Court.
Polymarket went from no trading fees at all to more than $1 billion in annualized revenue within six months. In the same stretch, it signed exclusive partnerships with Major League Baseball and the ATP Tour, raised capital at a valuation above $20 billion, and became the subject of active litigation in 20 states arguing its core product is illegal sports gambling.
Both things are true at once, and the outcome of the legal fight will likely determine which one matters more.
A Six-Week Sprint to $1 Billion in Revenue
Polymarket introduced taker fees, ranging from 3 to 7 basis points depending on the market, only after lifting its U.S. waitlist earlier this year.
According to the company, it crossed $1 billion in annualized revenue by late June. This was roughly six weeks after that access expanded, a period that coincided with the 2026 FIFA World Cup. The company said this generated close to $5 billion in trading volume on its platform.
Major Sports Leagues Sign On, Reversing Earlier Betting Bans
Major League Baseball named Polymarket its exclusive prediction market partner in March, in a multiyear agreement reported at $150 million to $300 million over three years.
The deal grants Polymarket exclusive use of official MLB data and team marks, while the two organizations agreed to restrict markets tied to individual pitches, manager decisions and umpire performance.
MLB Commissioner Rob Manfred signed a separate memorandum of understanding directly with the CFTC, the first agreement of its kind between the regulator and a major American sports league, and said formal prediction market deals would “aid in overall game integrity.”
Less than a year earlier, MLB’s own player conduct policies had characterized prediction market use as a betting violation.
The NHL, MLS, and UFC had already signed similar partnerships before the MLB deal. In August, Polymarket became the ATP Tour’s official prediction market provider, covering roughly 20,000 matches per season, and separately expanded its existing data partnership with Sportradar to cover more than 20 leagues and roughly 300,000 matches annually.
Sportradar Chief Executive Carsten Koerl described the expanded deal as cementing the company’s role as “the foundational infrastructure powering this ecosystem.”
Investors Now Value Polymarket Above $20 Billion
Intercontinental Exchange, the parent company of the New York Stock Exchange, took a $2 billion stake in Polymarket in October 2025 at a $9 billion valuation, and the two companies also agreed to collaborate on tokenization initiatives.
Polymarket raised another $600 million in March at a $15 billion valuation, around the time the CFTC finalized its approval for the platform to operate as a registered exchange.
As of early August, the company was reportedly in talks to raise $1 billion at a valuation above $20 billion. Rival Kalshi was valued at $22 billion in May and has been pursuing additional funding that would value it near $40 billion.
Polymarket founder and Chief Executive Shayne Coplan has described the platform as an information market rather than a betting venue, saying it lets users “put your money where your mouth is” when they disagree with consensus expectations.
Twenty States and 44 Attorneys General Push Back
The legal challenge to that framing began with individual state actions rather than a coordinated campaign. Tennessee issued cease-and-desist letters in January. Arizona brought the first criminal charges against a prediction market platform, targeting Kalshi.
Nevada’s civil enforcement action forced both Polymarket and Kalshi to halt operations in the state. Rhode Island, Massachusetts, Wisconsin, Michigan, Washington, Connecticut, Illinois, New Jersey and New York have each filed their own actions, arguing in various forms that the platforms function as unlicensed sportsbooks.
In late July, 44 state attorneys general, all but five, signed a letter telling the CFTC it lacks authority to regulate sports-related event contracts on these platforms, describing them as avoiding state taxes and consumer protections.
The nonpartisan Tax Foundation has estimated the resulting lost state tax revenue at roughly $2 billion annually. Traditional sportsbook and casino operators have supported several of the state actions, arguing the platforms compete without carrying the licensing costs or tax obligations those operators bear.
The CFTC Defends Its Jurisdiction as a Federal Court Rules Against It
The CFTC maintains that event contracts traded on its registered exchanges are financial derivatives subject to exclusive federal oversight, and it has sued nine states to defend that position, seeking declaratory judgments and injunctions against state enforcement.
In August, after New York’s attorney general sued Kalshi seeking $36 billion in damages, the CFTC invoked emergency authority under the Commodity Exchange Act for only the seventh time in its history to order Kalshi to keep operating nationwide.
Separately, the agency has proposed rule changes that would subject certain event contracts, including those tied to political violence or assassination, to stricter review, and it has directed platforms to stop displaying contracts using gambling-style odds formats.
That federal position suffered a setback on August 28, when a three-judge panel of the Ninth Circuit Court of Appeals unanimously ruled that states can regulate prediction markets as gambling, writing that “the substance of the sports event contracts offered on Kalshi’s exchange is sports gambling.”
The ruling directly conflicts with an earlier Third Circuit decision that sided with the platforms, creating a circuit split that legal observers widely expect to draw Supreme Court review. If the CFTC’s preemption argument ultimately fails, prediction market platforms could need individual state gaming licenses and become subject to state tax obligations their current structure avoids.
Market Integrity Questions Complicate the Growth Story
Separate from the jurisdictional fight, an analysis of platform trading data identified roughly $200 million in Polymarket trades during the first half of 2026. This showed patterns consistent with potential insider activity, much of it concentrated in geopolitical markets tied to Iran and Venezuela. Polymarket has said it referred approximately 100 associated wallets to law enforcement.
The New York City Council separately opened an inquiry into marketing practices across Polymarket, Kalshi, Coinbase and Gemini Titan after a media investigation found a substantial share of promotional videos across the platforms depicted simulated trades presented as real activity.
Bank of America has separately warned in a research note of what it called “credit-fueled gambling” risk if leveraged access to prediction markets expands.
None of these issues resolve the core legal question, but they complicate the platforms’ argument that they primarily provide price discovery rather than a betting product.
A Supreme Court petition is likely, and a pending CFTC rulemaking still open for comment. The next several months will determine whether prediction markets continue operating under a single federal framework or face a state-by-state regulatory landscape that could reshape their business model entirely.
