Post-COVID, both prediction markets and social casinos have become huge in the US. Just recently, monthly trading volume on prediction markets exploded from $5 billion in September 2025 to $24 billion in April 2026, while the US social casino industry sits at an estimated value of $10.2 billion. And as young Gen Z and Millennials continue engaging in using them in huge numbers, questions surrounding their legality remain prominent, as there’s much confusion as to where these platforms are actually legal.
Prediction Markets Allow Americans to Bet on Endless Outcomes, While Social Casinos Offer Prize-Winning Opportunities
The past few years have witnessed prediction markets explode across the US in a way that even industry experts didn’t see coming. How these sites function is that they allow individuals to trade ‘contracts’, which are essentially bets, on the outcomes of a huge range of unknown future events. A quick glance on either Kalshi or Polymarket reveals markets like ‘2028 U.S. Presidential Election Winner?’, ‘When will Bitcoin cross $85K again?’, ‘Highest Temperature in Miami today?’, and thousands of other markets, ranging from sports to pop culture. In a nutshell, Americans can select simple YES/NO contracts on endless outcomes, making for what has quickly become an incredibly simple and accessible betting platform for the average person.
Similarly, social casinos, which follow a legal framework that involves players betting virtual coins rather than actual money, are taking advantage of what was once a largely untapped market space. Back during quarantine in 2020, millions of Americans were locked down in their homes, so this led to a surge in popularity for free-to-play social casinos. Since then, a billion-dollar market has been created and there are now over 400 active social casinos on the internet, including big-name brands like Chumba, Crown Coins, and Stake.us. The pulling point behind these casinos is that the sweepstakes model they adopt lets players join for free and play casino-style games for prizes, such as gift cards and cash transfers, and it’s led to social casinos becoming extremely popular not just with gamblers, but with casual gamers as well.
Off the back of this, America has the world’s biggest prediction market and social casino industries. But it’s not come without legal drama, as both these spaces have spent the past several years dealing with legal controversies, lawsuits, and fallouts. State bans and regulations are on the rise, so there’s plenty of confusion at the moment as to where prediction markets and social casinos are actually legal.
New York Sues Kalshi, But Prediction Markets Remain Legal in Majority of US
The rise of prediction markets in the US, where monthly trade volumes are now pushing $25 billion, was always going to lead to states taking a closer look at them. Just like social casinos, these sites have become unavoidable from a legal perspective. Unsurprisingly, a lot of states are unhappy with prediction markets and believe they offer unlicensed betting, which is why New York is spearheading a crackdown on Kalshi and other prediction market sites.
The lawsuit brought forward by New York accuses Kalshi of using financial trading as a way to hide illegal gambling. Attorney General Letitia James claims that “prediction markets like Kalshi are gambling platforms, plain and simple.” and the state is pushing to have prediction markets outright banned, while also reclaiming the profits they’ve made from consumers. Yet as things stand, prediction markets are still legal in New York and the vast majority of other states, with Minnesota the only state so far to have officially signed a law banning these sites. New York is likely to join Minnesota soon, though, as will several other states looking to bring prediction markets down.
Social Casinos Are Now Only Legal in 33 States Following Wave of Bans
While prediction markets have, at least for now, been able to hold off most states looking to ban or regulate them, it’s been a different story for social casinos.
Since 2024, Maine, Washington, New York, Michigan, Montana, California, New York, Connecticut, Nevada, Louisiana, New Jersey, Indiana, and Tennessee have all issued bans or heavy restrictions on social casinos, while players in Idaho are no longer able to redeem real cash prizes. This has caused big operators like Virtual Gaming Worlds to lose out on significant player pools they’d spent the previous half-decade building up.
On top of this, there’s been a rising number of player-filed lawsuits against the likes of VGW and Stake. Even rapper Drake and streamer Adin Ross, both of whom are known collaborators with the Stake brand, have been named in lawsuits by players accusing them of promoting illegal and irresponsible gambling. New York, which has adopted a serious anti-illegal gambling stance over the past couple of years, has just won a lawsuit against VGW and the company will now have to payout $8 million in damages from it.
It was also only last year when a Washington state jury ordered High 5 Casino to pay $24.9 million in damages to its social casino players as part of a class-action lawsuit, the biggest loss for any social casino to date. More cases similar to this are also expected to arrive over the coming months now that the legal floodgate against social casinos has opened.
Yet despite how targeted social casinos are at the moment, the social casino industry itself is arguably stronger than ever. VGW just announced over $7bn in revenue before going private, while new social casinos are hitting the market practically every single month. And as it currently sits, these casinos are still legal in 33 states, which is seemingly more than enough for operators to keep pulling in profits and remain largely undeterred.
Is Traditional Gambling in the US Dead?
The explosive success of prediction markets and social casinos throughout America has raised a larger question as to whether traditional gambling is on its way out the exit door.
Las Vegas is reported to have turned into a ghost town over recent years, while prediction markets and social casinos are quickly becoming many people’s go-to betting outlets (this is especially true for sports bettors, who are ditching traditional sportsbooks in huge numbers now).
For the US, it appears to be the start of a new era for gambling, where traditional casinos and sportsbooks are increasingly being challenged by more accessible, digital-first alternatives.
This could, of course, swiftly revert backwards if more states are successful in their attempts to remove prediction markets and social casinos, but as recent cases have shown this could be trickier than lawmakers first thought, particularly considering how much tax revenue the likes of Polymarket and Kalshi are now capable of generating.
