On Friday, December 19, 2025, the fast-growing world of prediction markets—often framed as “event trading” and sometimes criticized as a backdoor to sports betting—delivered a cluster of developments that show just how quickly the category is moving from crypto niche to mainstream financial battleground.
In just 24 hours, headlines ranged from DraftKings launching a standalone prediction-market product, to Coinbase suing three U.S. states over who gets to regulate event contracts, to Polymarket restoring services after a Polygon-related disruption, all while trading apps like Robinhood keep expanding sports-style contracts that look increasingly similar to parlays—only packaged as exchange-traded “yes/no” instruments. [1]
Below is a full, publication-ready recap of the key stories driving the prediction-market surge—plus what they mean for users, regulators, and the future of retail trading.
Robinhood’s “event trading” push: from election contracts to NFL-style parlays
Robinhood has been steadily widening its prediction-market offering, and this week’s focus has been unmistakable: sports.
In a Sports Business Journal report on Robinhood’s expansion, the company is described as “stepping up” its prediction markets by letting customers trade preset combinations across NFL games—functionally comparable to parlay bets—and adding player-performance contracts that can be traded in real time. The report also notes Robinhood plans to allow custom combos of up to 10 outcomes across NFL games starting in early 2026. [2]
Robinhood CEO Vlad Tenev: “beginning of a prediction market supercycle”
In a Bloomberg Television interview transcript shared by Bloomberg Television on LinkedIn, Robinhood CEO Vlad Tenev positioned this shift as part of a much bigger trend—calling prediction markets a disruptive market structure that can expand far beyond sports.
Tenev said Robinhood started with a single prediction market for the 2024 U.S. presidential election, and since then has grown to “over 1500 contracts” spanning domains such as politics, world affairs, economics, culture, weather, and sports. [3]
Crucially, he argued that the innovation is applying a regulated exchange-style structure—where “buyers and sellers are matched”—to many categories traditionally handled by other industries. He specifically pointed to weather contracts as a glimpse of how prediction markets could eventually challenge pieces of the insurance business, and concluded that the industry may be at the start of a “prediction market super cycle” with accelerating volumes and listed contracts. [4]
Why this matters
Robinhood’s strategy is not simply “more products.” It’s a reframing of how a new generation of retail users engages with risk:
- Sports brings frequent outcomes and high engagement—ideal for trading volume.
- Combination-style contracts (combos) mimic the dopamine loop of parlays.
- Expansion beyond sports (weather, economics, politics) pushes prediction markets closer to the “everything exchange” model that more platforms are chasing.
That combination is why event trading is increasingly being described as the next retail battleground—a contest for attention, volume, and recurring transaction fees inside the same apps people already use for stocks and crypto. [5]
DraftKings launches “DraftKings Predictions” in 38 states
On Dec. 19, 2025, DraftKings formally jumped deeper into prediction markets with the launch of DraftKings Predictions, a standalone product that expands the fight between sportsbooks, trading platforms, and prediction-market operators. [6]
According to Axios, the product goes live in 38 states, including major markets like Texas and California where traditional sports betting remains illegal—one of the biggest reasons prediction markets have become so strategically important for gambling-adjacent companies. [7]
No parlays (yet)—but “combos” are becoming the must-have feature across the industry
DraftKings’ launch also highlights a key product arms race. Axios reported that DraftKings Predictions initially won’t offer parlays (combined bets), even as the broader prediction market ecosystem experiments with parlay-like structures under different names. [8]
That matters because parlays are widely seen as one of the most profitable and engagement-driving mechanics in sports betting. In the prediction-market format, “combos” aim to replicate that behavior while fitting into an exchange-like framework.
Coinbase sues Connecticut, Illinois, and Michigan over prediction-market oversight
Another major December 19 development: Coinbase escalated the regulatory fight.
A Finance Magnates report says Coinbase filed lawsuits in Connecticut, Illinois, and Michigan, arguing state officials are unlawfully treating prediction markets as gambling products and asking federal judges to affirm that oversight should sit with the Commodity Futures Trading Commission (CFTC) rather than state gaming regulators. [9]
Coinbase’s Chief Legal Officer Paul Grewal framed the fight as federal preemption—drawing a sharp distinction between sportsbooks and exchange-style event contracts. He argued that while casinos profit when customers lose, prediction markets function as “neutral exchanges” that match buyers and sellers. [10]
“Enforcement action is imminent”: the state-by-state pressure cooker
An SBC Americas report dated December 19, 2025 adds more color to the immediate legal stakes, saying Coinbase’s filings suggest enforcement actions could be imminent in some states against firms offering sports-related event contracts.
The same report notes:
- Connecticut’s consumer protection department sent Kalshi a cease-and-desist letter earlier in the month (Kalshi then sued).
- Coinbase alleged regulators in Michigan and Illinois have sent multiple cease-and-desist letters to Kalshi and others and that it expects enforcement action soon.
- State regulators also warned licensees about partnering with event-contract companies. [11]
This is the core tension defining prediction markets right now: federal derivatives oversight vs. state gambling oversight—and the answer may be decided not by product design, but by litigation calendars.
Polymarket on Dec. 19: a Polygon-linked disruption, restored—amid broader “drama” scrutiny
While U.S.-regulated platforms fight courtroom battles, Polymarket—still deeply associated with crypto rails and onchain settlement—had its own headline on Dec. 19.
Polymarket restores operations after Polygon network disruption
Unchained reported on December 19, 2025 that a disruption affecting Polygon PoS RPC nodes caused temporary issues for Polymarket, impacting core functions such as trades, data providers, deposits, and withdrawals. The outlet cited a Polymarket team message posted in the project’s Discord, and said the platform later confirmed services were restored. [12]
The incident reignited a recurring concern for crypto-based prediction markets: external infrastructure dependencies. Unchained reported that the disruption also fueled speculation Polymarket could prioritize developing (or migrating to) more controlled infrastructure to reduce reliability risks. [13]
The “drama” isn’t just technical—it’s governance and market resolution
The same week Polymarket dealt with reliability questions, Bloomberg’s Pointed quiz newsletter referenced “Polymarket drama” as a topic that stumped some quiz players—another signal that prediction-market controversies are now mainstream finance conversation material. [14]
And the biggest recent example is the now-famous $59 million bet about Polymarket itself. A Bloomberg News story republished at Bloomberg Law explained that traders put more than $59 million on whether Polymarket would launch its U.S. platform by year-end—but the question’s “yes/no” simplicity collapsed into disagreement after what Bloomberg described as a quiet, limited soft launch to testers and debate over whether that met the criteria for being “live.” [15]
Separately, Wired has documented how disputes over subjective outcomes—such as whether a public figure’s outfit qualifies as a “suit”—can trigger user backlash and allegations of manipulation when token-governed arbitration mechanisms decide contentious resolutions. [16]
The takeaway: as prediction markets scale, settlement credibility becomes as important as liquidity. If users don’t trust how a market resolves, the market’s “price” stops functioning as a reliable signal—no matter how viral the contract gets.
The CFTC backdrop: regulatory “no-action” relief and an industry coalition push
While the most visible Dec. 19 headlines involved product launches and lawsuits, the bigger structural story is the regulatory scaffolding being built around event contracts.
On December 11, 2025, the CFTC published a press release stating its Division of Market Oversight and Division of Clearing and Risk issued no-action positions related to swap data reporting and recordkeeping rules tied to certain binary option transactions and related activity—under narrow circumstances and subject to conditions. [17]
That matters because prediction markets increasingly operate at the intersection of:
- derivatives-market compliance,
- surveillance and integrity expectations,
- and public scrutiny over whether “event contracts” are simply sports betting by another name.
Meanwhile, Reuters reported that Kalshi and Crypto.com launched a national industry alliance—the Coalition for Prediction Markets—with members including Coinbase, Robinhood, and Underdog. Reuters said the coalition aims to strengthen a federal framework for prediction markets, set nationwide integrity standards (including guarding against insider trading), and push back on what it described as state-level overreach. [18]
What happens next: the 2026 prediction-market endgame
With Dec. 19’s news burst, a few themes now define what to watch heading into 2026:
1) Product convergence: trading apps, sportsbooks, and crypto platforms are building the same thing
Robinhood is adding combo-style structures and player contracts. DraftKings is launching prediction markets nationwide where sports betting can’t. Coinbase wants in through Kalshi access. The product endpoints look increasingly similar—even if the regulatory wrappers differ. [19]
2) Regulation will likely be decided by courts before it’s decided by lawmakers
Coinbase’s lawsuits and the cease-and-desist cycle described by SBC Americas illustrate that prediction markets are currently expanding in the gaps between state and federal authority. [20]
3) Trust and integrity are the real competitive moat
From Polymarket’s infrastructure hiccups to high-profile disputes over market resolution, platforms that can prove reliability, transparent rulebooks, and credible settlement will have a decisive advantage—especially as institutional participation grows and as “event contracts” spread into areas like weather and insurance-like hedging. [21]
In short, December 19, 2025 wasn’t just another busy day in fintech and crypto news—it was a snapshot of a sector rapidly reorganizing around a single question: are prediction markets the next evolution of trading, or the next evolution of betting?
The answer will shape how millions of retail users interact with risk—whether they call it investing, gambling, or simply tapping “Yes” and “No.” [22]
References
1. www.axios.com, 2. www.sportsbusinessjournal.com, 3. www.linkedin.com, 4. www.linkedin.com, 5. www.sportsbusinessjournal.com, 6. www.axios.com, 7. www.axios.com, 8. www.axios.com, 9. www.financemagnates.com, 10. www.financemagnates.com, 11. sbcamericas.com, 12. unchainedcrypto.com, 13. unchainedcrypto.com, 14. www.bloomberg.com, 15. news.bloomberglaw.com, 16. www.wired.com, 17. www.cftc.gov, 18. www.reuters.com, 19. www.sportsbusinessjournal.com, 20. www.financemagnates.com, 21. unchainedcrypto.com, 22. www.linkedin.com
