NHL's Prediction Market Pact Ignites Regulatory Firestorm

The prediction market sector is experiencing a surge, with platforms like Kalshi and Polymarket at the forefront of a rapidly evolving landscape. Kalshi, the U.S.-based prediction market platform, reported over $2 billion in notional trading volume in the week leading up to October 2025, driven by major sports events such as the MLB playoffs and NFL games, according to a GuruFocus report. This growth has positioned Kalshi as a key player in a market that is attracting both retail and institutional participants, despite regulatory scrutiny and competition from traditional online sports betting operators like DraftKings.

The NHL's recent multi-year licensing agreement with Kalshi and Polymarket marks a significant milestone, making the National Hockey League the first major U.S. sports organization to partner with prediction market platforms, according to a CNBC report. The deal grants Kalshi and Polymarket access to the NHL's proprietary data and branding rights, while the league gains new customer protections. Kalshi CEO Tarek Mansour described the partnership as a "seminal moment" for the industry, hinting that similar agreements with other leagues could follow. The move underscores growing institutional confidence in prediction markets, which are increasingly seen as a legitimate financial tool for hedging and speculation.

However, Kalshi's expansion has sparked regulatory and industry concerns. U.S. geolocation firms, which enforce location-based compliance for online betting, have raised alarms about Kalshi's ability to operate nationwide under a Commodity Futures Trading Commission (CFTC) license without using GPS-based verification tools, according to Complete iGaming. Companies like GeoComply and Xpoint, which provide geolocation services to operators such as DraftKings and FanDuel, argue that Kalshi's approach could erode a multibillion-dollar compliance market and create regulatory arbitrage. A pending court case in Nevada, where regulators are seeking evidence against Kalshi's exemption from geolocation requirements, could set a precedent for how prediction markets coexist with state-level gambling laws.

Meanwhile, DraftKings, a long-standing leader in online sports betting, maintains a strong position amid the rise of prediction markets. The company, which expanded into sports wagering after the 2018 Supreme Court ruling, holds a prominent market share in 28 U.S. states and five for i-gaming, as noted by GuruFocus. Needham analyst Bernie McTernan highlighted DraftKings' advanced personalization features and broader market offerings as key differentiators, suggesting that new prediction market users are likely migrating from unregulated sectors rather than competing with existing sports betting platforms.

The regulatory and competitive dynamics surrounding prediction markets are expected to intensify as Kalshi and Polymarket scale their operations. While the NHL's partnership signals broader acceptance, challenges remain in harmonizing federal derivatives frameworks with state-level gambling controls. For now, the sector's growth is being fueled by technological innovation and institutional backing, but its long-term trajectory will depend on how regulators, lawmakers, and market participants navigate the evolving legal and ethical boundaries.