States are turning up the pressure on gambling and prediction markets

Sports betting regulation continues to evolve across the United States, with lawmakers, regulators and attorneys general taking increasingly active roles in shaping the future of the industry.

This month alone, states have moved to challenge prediction market operators, introduce new taxes, tighten responsible gambling measures and seek additional revenue from sportsbooks.

While each development is unique, they all point to the same trend: sports betting and prediction markets are under greater scrutiny than ever.

Here's what bettors should know.

Kentucky targets Kalshi and Polymarket

Kentucky Attorney General Russell Coleman has filed lawsuits against Kalshi and Polymarket, alleging the prediction market platforms are operating illegal sportsbooks in the state.

The lawsuits add to a growing list of legal challenges facing prediction market operators as states continue to argue that sports event contracts should be regulated under state gambling laws rather than federal commodities law.

Kentucky also filed a lawsuit against VGW, the operator behind sweepstakes casino brands including Chumba Casino, Global Poker and LuckyLand Slots.

For bettors, the key point is that state-level challenges to prediction markets and sweepstakes platforms are accelerating.

Illinois moves to tax prediction markets

Illinois is preparing to become the first state to impose a dedicated tax on sports-related prediction market contracts.

Under legislation signed by Gov. J.B. Pritzker, operators would pay a 1.75% transaction tax on sports event contracts, increasing to 3.5% after certain thresholds are reached.

The new tax is expected to take effect on July 1, though legal challenges are likely given the ongoing dispute between state regulators and the Commodity Futures Trading Commission over who has authority to regulate sports event contracts.

If implemented, Illinois could create a blueprint for other states seeking to directly tax prediction markets.

Ohio moves closer to banning credit card sportsbook deposits

Ohio regulators have unanimously advanced a proposal that would prohibit bettors from funding sportsbook accounts using credit cards.

Many major operators already ban the practice voluntarily, including DraftKings, FanDuel, Fanatics, Caesars, bet365 and BetMGM.

If approved, Ohio would become the tenth legal sports betting state to formally prohibit credit card deposits for sportsbook accounts.

For bettors, this policy is part of a broader responsible gambling push that aims to limit the use of borrowed money for wagering.

North Carolina considers higher sportsbook taxes

North Carolina lawmakers are considering increasing the state's sportsbook tax rate from 18% to 23%, according to WRAL.

The proposal comes as legal sports betting activity continues to grow in the state, with total handle up more than 6% year-over-year through legal operators.

Since launching in March 2024, North Carolina sports betting has generated hundreds of millions of dollars in tax revenue.

For bettors, higher tax rates can matter because they may influence sportsbook pricing, promotional spend and operator investment over time.

What bettors should understand

Taken individually, these developments may appear unrelated.

Together, however, they show where the industry is heading.

States are becoming more aggressive in regulating sports betting, prediction markets and gambling-related products as they look to balance consumer protection, market access and tax revenue.

For bettors, regulation can sometimes feel like background noise, but these decisions ultimately influence everything from which platforms are available and how they are regulated to taxes, responsible gambling tools and overall competition within the market.

Whether it is prediction markets, sportsbook taxation or consumer protection measures, one thing is becoming increasingly clear: the regulatory landscape around sports betting continues to evolve just as quickly as the industry itself.