Adjacent's Look Ahead - Week of August 17, 2026
CFTC Probes Mention Markets, Washington and Baltimore Pile On, and Kalshi Pulls a Product Line
Welcome to The Adjacent Weekly, your Sunday roundup of everything that moved prediction markets this week and everything worth watching next week.
Regulatory issues continue to dominate headlines. The CFTC opened a probe of “mention markets” and as a result Kalshi pulled its sports mention markets “until further notice.” Washington State’s King County court ordered Kalshi to cease contracts across a wide range of categories, and Baltimore filed suits against both Kalshi and Polymarket, naming Robinhood, Webull, and Coinbase as distribution partners. In industry news, Novig published a responsible-trading framework, Castle launched a prediction-market hedging firm, and Polymarket acquired Turf, an NFL prediction product.
The Week That Was: August 10-16
#1 - CFTC Opens Probe of Mention Markets
Federal regulators are looking into “mention markets”, contracts on whether a public figure says a particular word or phrase, over concerns they are too easily manipulated
Kalshi has already removed sports mention markets “until further notice.” Political, earnings call, live newscast mention markets are still trading.
The probe comes a month after ABC reported that President Trump’s teleprompter operator used Kalshi to profit from bets on the president’s speeches
NPR also highlighted the recent resolution dispute during the World Cup final, where a Fox sportscaster mistook Matt Damon for Brad Pitt. Kalshi’s market settled on “Pitt attended” per its contract rules and traders who bet No lost over $287,866
We recently launched a dispute and resolution database collecting everything from vague markets to manipulations. Consider submitting with your agent!
#2 - Washington State Court Orders Kalshi to Remove Contracts Across Several Categories, Not Just Sports
The order requires Kalshi to stop offering, accepting, or facilitating event contracts in Washington. The categories span from sports, to elections, politics, entertainment, culture, technology, science, and mentions.
IP and residency geofencing is required by August 19 and multi source geofencing by September 2
The banned categories are wider than those targeted in Michigan, Nevada, and New York
Washington is also seeking restitution, disgorgement, and civil penalties
Kalshi’s request to stay the injunction was denied by the Washington Court of Appeals
#3 - Baltimore Sues Kalshi, Polymarket, and Their Distribution Partners
The complaint also names distribution partners; Robinhood, Webull, and Coinbase
Baltimore is seeking an injunction, restitution, disgorgement, and civil penalties
Mayor Brandon Scott called the platforms “sportsbooks without licenses” and Kalshi claims the suits are little more than “political theater” aimed at relitigating issues already before the Fourth Circuit
Daniel Wallach@WALLACHLEGALNext steps: if they haven’t done so already, the defendants will be removing the City's civil enforcement action to federal court (and hoping for a judge other than Abelson) and then seek a stay of the removed case pending the 4th Circuit's imminent ruling in Kalshi vs. Maryland.
Daniel Wallach @WALLACHLEGALThe City of Baltimore's illegal gambling lawsuits vs. Kalshi, Robinhood, Coinbase, and Polymarket also seek the monetary remedies of disgorgement, restitution, and civil penalties—joining Massachusetts, New York, and Washington in seeking to claw back ill-gotten gains.5:05 AM · Aug 14, 2026 · 2.64K Views1 Like
#4 - Gemini Q2: Predictions “Largest Near Term Growth Opportunity”
Gemini reported second-quarter 2026 results on August 13 after the close, giving some insight on how prediction markets are performing inside a public exchange.
Total revenue rose 37% YoY to $45.0 million
Services revenue jumped 149% YoY
Exchange transaction revenue fell 38% YoY and spot trading volume dropped 66% due to bear market in crypto
Gemini Predictions posted record monthly volumes every month since April
On the call, Cameron Winklevoss called prediction markets the company’s “largest near-term growth opportunity”
The prediction business showed volume up 93% quarter over quarter with more than 225 million contracts traded since launch
Over 27,000 prediction market traders on the platform and number of contracted market makers tripled, 3x contracted market makers
Perpetual futures pending U.S. approval and are already live in Singapore
The stock fell about 5% on the announcement, extending GEMI’s decline this year to -56.7%. Clearly, the market remains focused on the weak crypto exchange segment, but what’s worth watching is the growing prediction market business
#5 - Kalshi Valuation Jumps to $40 Billion, 2x Increase Since May
The Information reported Sequoia and Wellington are in talks to co lead the new round just months after Kalshi raised at a $22 billion valuation in May. Kalshi’s annualized revenue has passed $4 billion.
#6 - Novig Releases Responsible Trading Framework
Novig announced a responsible trading framework written into the Ludlow Exchange rulebook, including the only nationwide 21+ age requirement among federally regulated prediction market platforms.
Framework covers; deposit and loss limits, cooling off periods, responsible marketing, restrictions on loss chasing incentives, and risk based monitoring
The move follows the CFTC’s recent advisory on incentive programs, which warned against “risk free” trades, unlimited rebates, and sweepstakes style rewards
Kalshi is rolling out incentives for their perp products
Novig has been a vocal advocate of self regulation as states continue to pressure the sector
#7 - Castle works with SIG and Kalshi to Hedge Atypical Risk
Castle Technologies, a new startup founded by four Stanford grads and backed by Ribbit, is using prediction markets to hedge risks that traditional insurers typically don’t cover.
CNBC exclusive detailed an early collaboration involving Susquehanna and Kalshi where a California goat herder paid a $50,000 premium for a contract that pays up to $500,000 if a state wage exemption is not extended, offering a hedge against rising labor costs
#8 - Polymarket Acquires Turf Team
Polymarket announced the six person team behind Turf, a real time NFL prediction product built around the next play, drive, and score, is joining to work across Polymarket’s U.S. web and app.
#9 - Underdog Sued by Aristotle
Underdog is being sued in Delaware by Aristotle, the creator of the exchange and clearinghouse Underdog acquired earlier this year, over the economics of the IG Group transaction
#10 - Kalshi Parlays Lead Volume in Early August
Over the first 12 days of August, parlays became Kalshi’s top category by volume, with more than $6 billion transacted. This represents over 41% of total platform volume and happened during the quietest stretch of the sports calendar.
Prediction Market Stocks: YTD Performance
Regulation and Industry News
Connecticut federal court rebukes CFTC’s declaration of “market emergency” and denies Kalshi’s motion for injunction pending appeal.
Volatility Shares files for 32 ETFs tied to each NHL team that will invest in futures contracts tied to the CME FSPI index.
CFTC Innovation Advisory Committee inaugural meeting set for Aug 20 in Washington
Kalshi Adopts Nasdaq Market Surveillance to Enhance Market Oversight
Camilo Saravia, founder of BlueWalker Capital, a prediction market hedge fund backed by Daniel Howard of Halo Capital was featured on the Odds On Open podcast
Ethan Kho@ethanrkhoInside the Billionaire Backed Prediction Markets Hedge Fund. Run by a 24-Year-Old. Camilo Saravia (@curiouscamilo), founder of BlueWalker Capital, a systematic prediction markets fund backed by Daniel Howard of Halo Capital. "I don't want more capital. I'm extremely long our2:02 PM · Aug 13, 2026 · 49.6K Views22 Replies · 23 Reposts · 362 Likes
The Week Ahead: August 17-23
Tuesday
Primary Elections: Alaska, Florida, Wyoming
Wednesday
July meeting details
Markets still debating September hike vs hold
White House to Host Prediction Market Executives
According to Politico, the White House is expected to meet with crypto and prediction market executives around August 19. The session lands as the CFTC probes mention markets and prepares its formal rulemaking.
Washington geofencing deadline
Kalshi must implement IP and residency geofencing for WA or face contempt exposure
Thursday
Trend check after recent soft prints
CFTC Innovation Advisory Committee
First session will be livestreamed, watch for rulemaking clues
Prediction Markets to Watch
The Florida Governor Republican Primary market will be worth watching next week as some polls are showing a close race between Donalds and Fishback, but markets are pricing in a lock with Donalds at 98%. Could we see another surprise like we saw in Wisconsin last week?
The battle for Senate control remains a coinflip with markets pricing in a slight edge for the Democrats. Let’s see if this week’s primaries have an impact on forecasts for the general election.
Forecasters are predicting record-breaking intensity for this year's emerging El Niño. Odd Lots podcast sat down with Justin Mankin, professor of geography at Dartmouth, this week to explain this weather phenomenon and the economic impact.
Resolution and Disputes
Adjacent launched its Resolution and Dispute database this week, a public record of markets that had questionable resolutions. Two recently submitted cases:
Atlanta high temperature market (Polymarket, Aug 5): the resolution source showed 90F on its “Day High” banner but 89F on its hourly observations table. The same source yielding two outcomes because the rule never specified which display governs the resolution. Filed as Source dependence.
Earthquake of at least 6.8-7.4 market (Kalshi, August): the market resolved YES on an event that occurred ~85 minutes before the market was listed. Filed as Definitional vagueness.
The broader resolution dispute theme continues to surface in the mention markets. Kalshi’s World Cup “Brad Pitt attended” market settled on the mistaken on-air call, strictly per contract, costing “no” traders $287,866. The Trump “de Tocqueville”/John Deere resolution from two weeks ago continues to draw criticism as a textbook example of antagonistic settlement.
The Index Tracker
This week we focus on the battle for the Senate. SENBGD closed at 126.20, up +0.28% from a week earlier, as Democrats hold ground in battleground states. SENBGR closed at 74.95, up +1.02% for the week, with Republicans gaining ground in Michigan, but slipping in North Carolina (shown below). The Senate battleground continues to favor Democrats; the House battleground tilts Republican.
Interview of the Week
The Oracle by Polymarket and Werner K. Zagrebbi sat down with Robin Hanson, the intellectual godfather of modern prediction markets.
Final Word
Another week has passed with a flurry of court actions against the major exchanges; the CFTC probe, Washington cease order, and Baltimore suit all arrived within days. The situation is similar to the crypto industry where regulators couldn’t keep up with the pace of innovation and consumer adoption, Bitcoin was invented almost 20 years ago and the Clarity Act is yet to pass.
In the week ahead, we should get some additional color on the regulatory front from the White House meeting and CFTC’s advisory committee livestream.
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.
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