Adjacent's Look Ahead — Week of August 3, 2026
New York Sues Kalshi, Underdog Acquired, and Midterms Come Into Focus with Primaries in Several Key States on Tuesday
Welcome to The Adjacent Weekly, your Sunday rundown of everything that moved prediction markets this week and everything worth watching next week.
New York’s attorney general sued Kalshi in state court for running an illegal gambling operation, days after the Second Circuit denied Kalshi’s injunction request. Additionally, a Wisconsin federal judge handed the CFTC a loss, ruling that sports event contracts are not “swaps” under the Commodity Exchange Act. The industry now faces a multi-front legal war that is likely headed to the Supreme Court.
On the M&A front, Underdog was acquired by IG Group for up to $1.3 billion and Fanatics to acquired an exchange (Water Street Labs) and clearinghouse (CX Clearinghouse) from BGC, will partner on prediction markets. Robinhood reported Q2 earnings showing prediction market revenue surpassing crypto for the first time.
The Week That Was - July 26 - August 3
#1 New York Sues Kalshi in State Court
Late Thursday night, New York’s attorney general filed suit against Kalshi in state court for allegedly “running an illegal gambling operation in New York through its prediction market platform.” The lawsuit follows the Second Circuit’s denial of Kalshi’s emergency injunction request, which cleared the path for the NY AG to pursue enforcement.
The suit seeks injunctive relief and disgorgement under Executive Law Section 63(12)
Prior NY actions against other platforms suggest possible Wire Act claims
This is the state-court phase that was expected after the federal appeals court loss
#2 Wisconsin Federal Court Denies CFTC Injunction
A Wisconsin federal judge denied the CFTC’s motion for a preliminary injunction against state enforcement of gambling laws on sports event contracts. The court held that sports event contracts are not “swaps” under the Commodity Exchange Act, and even if they were, the CFTC is unlikely to prevail on preemption.
Related suits against Kalshi, Polymarket, and other platforms are expected to be remanded to state court
A telephone hearing is scheduled for August 25 in the CFTC lawsuit against Wisconsin
The Sixth Circuit (Kalshi vs. Ohio) also held oral arguments this week. The industry now faces adverse rulings in multiple federal circuits, increasing the likelihood of a Supreme Court showdown.
#3 Underdog Acquired by IG Group for Up to $1.3 Billion
Underdog, one of the fastest-growing prediction market platforms, was acquired by IG Group for up to $1.3 billion, with up to $850 million for eligible Underdog employees. Underdog had recently launched its own exchange (UDX) and was posting volume numbers that exceeded long-established competitors.
This is the first major >$1b M&A exit in the prediction market space
Underdog had raised venture funding and bought/built an in-house exchange (UDX/Aristotle Exchange) that exceeded ForecastEx and DKeX volume within 10 days of launch
IG Group is a UK-based trading platform, bringing international capital into the US prediction market ecosystem
#4 Robinhood Q2: Prediction Markets Beat Crypto
Robinhood reported Q2 earnings on Wednesday. Event contract revenue reached $156 million for the quarter, surpassing crypto trading revenue of approximately $100 million for the first time. Robinhood now has nearly 2 million prediction market customers.
Rothera accounted for $17 million of event contract revenue
Rothera has rapidly become a top-3 DCM in the US
13.6 billion event contracts traded in Q2, including 6.4 billion in June alone
CEO Vlad Tenev indicated Robinhood is in conversations with the CFTC about offering perpetuals in the US
Robinhood plans to push more flow through Rothera while maintaining relationships with Kalshi and other exchanges
#5 CBOE Q2: Record Revenue, Event Contracts Called Out as Growth Driver
CBOE Global Markets reported Q2 2026 results on Friday morning. Diluted EPS of $3.35, up 50% year-over-year. Record net revenue of $731.6 million, up 25%. CBOE raised its 2026 organic total net revenue growth target to “mid to high teens” from “low double-digit to mid teens.”
Options segment net revenue: $473.9 million, up 30%
CEO Craig Donohue specifically called out “expanding event contracts” as a growth priority alongside Cboe Clear U.S. and around-the-clock market access
North American Equities revenue: $114.7 million, up 17%
CBOE is the only prediction market-adjacent stock that is green YTD (+19.5%)
#6 Coinbase Q2: Revenue Miss, $359M Net Loss
Coinbase reported Q2 results Thursday after close. Revenue of $1.22 billion missed analyst estimates of $1.30 billion, an 18.5% year-over-year decline. GAAP loss of $1.36 per share was significantly worse than the expected -$0.42 loss.
Net loss of $359 million
Adjusted EBITDA of $207.8 million missed estimates of $301.7 million
Free cash flow margin of 16.2%, down from prior quarters
Stock dropped 5.3% in after-hours trading to $154.89
Coinbase has been expanding into prediction markets via its Kalshi partnership and acquired prediction market startup Clearing Company in December 2025
#7 Apple and Amazon Report After Close
Apple reported Q3 FY2026 results Thursday after close. Revenue of $109.4 billion, up 16% year-over-year, beating estimates of $108.2 billion. EPS of $2.02 vs estimates of $1.89. iPhone revenue $54.25 billion beat estimates. Services revenue $30.74 billion slightly missed. This is Tim Cook’s last earnings report as CEO.
Amazon reported Q2 results Thursday after close. Revenue of $200.6 billion beat estimates of $196.5 billion. EPS of $5.75 far exceeded the expected $1.82. AWS grew 37% year-over-year. Amazon hiked its 2026 capex guidance to $220 billion due to higher memory costs. Operating income was $27.5 billion, up 43% year-over-year.
#8 CFTC Comment Period Closes With 1,400+ Submissions
The CFTC’s public comment period on proposed rules for event contracts closed with more than 1,400 submissions, up from roughly 130 the day before the deadline.
44 states argued the CFTC lacks authority over sports prediction markets
The NCAA urged a ban on individual student-athlete event contracts
The NBA and MLB said the proposal falls short on integrity protections
Players associations for NFL, MLB, NBA, NHL, and MLS called for a complete prohibition on contracts manipulable by a single person
The NBA also asked for a minimum trading age of 21 for sports event contracts
#9 NY Mets Become First MLB Team to Partner With a Prediction Market
The New York Mets became the first MLB team to partner with a prediction market platform, partnering with Novig. This follows the pattern of prediction market platforms expanding into sports-adjacent partnerships as the regulatory landscape evolves.
#10 Clarity Act Running Out of Legislative Time
The Clarity Act needs a Senate vote before August recess. Kalshi’s market for a vote by August 8 is pricing only 28% YES. Polymarket’s broader “Clarity Act signed into law in 2026” is at 22%, down from 55% earlier in the week. The legislative window is narrowing as the ethics clause debate continues.
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The Week Ahead Calendar- August 3-9
Monday
ISM Manufacturing: Odds of 51-52 are priced at 43% on Polymarket
Tuesday
JOLTS Job Openings: Polymarket traders are pricing 49% chance number comes in between 7.4M-7.6M
Earnings from UBER (87% odds), AMD (91% odds), LLY (73% odds)
Primaries in Kansas, Michigan, Missouri, Virginia, and Washington
Wednesday
ISM Services: Polymarket sees 43% odds on 54-55 range
Thursday
Initial Jobless Claims: Kalshi has at least 200,000 trading at 72%
Friday
Nonfarm Payrolls: Kalshi trades see 52% chance print is above 80,000
Saturday
Primaries in Hawaii
Prediction Markets to Watch
Fed Decision in September after a 9-3 split in July with Hammack, Kashkari and Logan dissenting in favor of a 25-basis-point rate hike
With continued concerns around sections of the Clarity Act and relentless pushing from Coinbase, Robinhood, SoFi, BlackRock, etc. it is unlikely to be voted on in the Senate prior to the August recess after being passed for over a year in the House
Continued onslaught of states and regulators suing individual platforms and CFTC advisory on self-certification
The guidance reiterates that broad, template-style certifications should not be submitted. It also explains when closely related event contracts may be certified as a class or submitted for approval under Commission Regulations §§ 40.2(d) or 40.3.
Both a law and the “SCOTUS accepts sports event contract case by...?” are top of mind (though thinly traded)
More or less decided that it was not sold to Citadel in this profile of Leopold and SALP but interesting to watch throughout the month as they get back on their feet
Republican Rep. Max Miller (OH-07), who has been accused of domestic violence by his ex-wife, says he will make a “special announcement” tomorrow at 10am ET.
Regulation and Industry News
New York AG sued Kalshi in state court for running an illegal gambling operation
Wisconsin federal court denied CFTC preliminary injunction, August 25 hearing scheduled
CFTC comment period closed with 1,400+ submissions from states, leagues, and players associations, including both NFL and NBA
CME Group announced partnership with FutureSports to launch futures on sports performance indices
Polymarket launched the Polymarket Institute for academic research on prediction markets
Binance US plans to apply for CFTC DCM license next month to offer prediction markets
New Jersey received extension through September 3 for SCOTUS petition in Kalshi case
Kalshi CEO responded to Minnesota governor on insider trading concerns
Bloomberg reported $294 million in trader losses on Kalshi parlay-style combination contracts; Kalshi disputed the analysis
NEXTPredict conference organizers used Kalshi to hedge $3 million in attendance risk for $12,000 premium
Eventual News launched as a prediction market media company backed by LightShed, in partnership with Polymarket
Polymarket launches new market related to the massive blowup of Situational Awareness
Resolution and Disputes
Mention market traders were not happy with the resolution on the What companies will Trump say in July market when it resolved Yes after Trump’s birthday message to Alexis “de” Tocqueville. Remarkably, this was counted as the ticker symbol for John Deere, DE.
In sports, the Giants vs Angels game threw traders for a loop when two scores were reported, causing series pain for bonders.
The Index Tracker
This week we highlight the new battleground indices. SENBGD closed at 127.85 reflecting the strength of the Democrats in the Senate battleground states. Republicans improved their hold on the House battleground states with HOUBGR closing at 105.52, up 1.60% for the week.
Interview of the Week
Stu at Predictable sat down with the legendary Scottilicious, a well known trader on Polymarket who has made more than $1.5 million trading prediction markets.
Final Word
The big question for next week, how will primaries in five key states impact the midterms?
On the regulatory front, the NY lawsuit against Kalshi is the story that will define the industry’s trajectory. If Kalshi is forced to exit New York, platforms that have both gaming licenses and operate prediction market exchange like DraftKings and FanDuel are put in an even more interesting spot. If Kalshi wins in state court or gets a stay, the expansion continues. Either way, this is heading to the Supreme Court
We will be back next Sunday with another roundup. For daily coverage, follow Adjacent Press and the Morning Brief by PROPHET x Adjacent, published every weekday.
This is not investment or trading advice. Do your own research. These are observations about prediction market movements, not recommendations.
HOOD PM Rev vs. Crypto basically confirms (to some extent) the trend of Crypto Traders migrating to PMs