The flashing scoreboards of March Madness used to mean a road trip to Iowa or a visit to a Nebraska casino for Cornhusker fans wanting a piece of the action. Now, a different kind of gamble is unfolding on phones across the state, and it’s sparking a legal and ethical showdown. It’s not about sportsbooks, exactly. It’s about “prediction markets” – platforms like Kalshi and Polymarket where users aren’t betting against a bookie, but against each other, trading on the likelihood of future events. While traditional sports betting has taken root in Nebraska since 2023, generating over $9 million in revenue last year, these new markets have quietly amassed over $97 million wagered on Nebraska Cornhuskers men’s basketball alone this season, raising questions about a loophole that could be undermining the state’s carefully constructed gambling landscape.
The core of the conflict lies in semantics. Prediction markets frame themselves as exchanges, akin to the stock market, where users “trade” on outcomes. This distinction, they argue, places them under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC), not individual state gambling regulations. Under the Donald Trump administration, the CFTC largely agreed, leading to explosive growth for these platforms since 2024. But states, and crucially, Native American tribes who have invested heavily in legal casino operations, aren’t buying it. They see it as illegal gambling dressed up in financial jargon, a circumvention of state laws and taxes. Nebraska Attorney General Mike Hilgers has already signaled his support for a lawsuit brought by California tribes against Kalshi, calling these markets “a loophole gone wild.”
This article draws on reporting from flatwaterfreepress.org.
The stakes extend beyond revenue. Lance Morgan, CEO of Ho-Chunk Inc. and WarHorse Casino, isn’t mincing words: “It looks like a sports bet. It quacks like a sports bet. It’s a sports bet.” He points to the potential for lost tax revenue – money earmarked for property tax relief, local governments, and crucially, problem gambling services. WarHorse Casino itself saw a 13% drop in Super Bowl betting this year, a potential sign of customers migrating to these unregulated platforms. But the concern isn’t just about dollars and cents; it’s about the potential for increased addiction. Mike Sciandra, director of the Nebraska Council on Problem Gambling, is already seeing clients struggling with prediction markets, noting they deliver “the same dopamine hits…and the same financial consequences as any other form of gambling.” He fears the ease of access will disproportionately impact young adults.
The story of Lincoln retiree Bob Linhardt illustrates the appeal. Drawn in by news reports criticizing the platforms, he discovered Kalshi and began wagering “pocket money” on basketball and politics, including bets on his beloved Huskers – something prohibited at local casinos. For him, and others like him, it’s about freedom of choice. But for Braden Burns, a Lincoln graphic designer, the ease of access is a danger. Having battled gambling addiction in the past, he found the temptation resurfaced with the integration of prediction markets into familiar investment apps like Robinhood. “That layer of friction that I managed to maintain for the last five years is now gone,” he says, worried others will fall into the same trap.
The legal battle is escalating. Arizona’s attorney general recently filed criminal charges against Kalshi, alleging unlicensed gambling. With court rulings so far divided, the issue seems destined for the Supreme Court, according to CME Group CEO Terry Duffy, who sees a need for a clear definition of what constitutes a prediction market versus gambling. Meanwhile, Nebraska State Senator Dunixi Guereca is eyeing a “sin tax” on these markets to address the state’s $800 million budget shortfall. The platforms themselves maintain they are operating legally, with Kalshi emphasizing its role as a licensed derivative exchange and DraftKings pledging to halt operations in states that legalize sports betting.
This isn’t simply a Nebraska story. It’s a microcosm of a larger tension: the rapid evolution of online gambling and the struggle of regulators to keep pace. The question isn’t just whether prediction markets are gambling, but whether the current regulatory framework can adequately protect consumers and ensure a fair playing field. As more states consider legalizing online sports betting, will they also grapple with the rise of these “trading” platforms, or will they become the new frontier of unregulated wagering, leaving states to chase a moving target and potentially leaving more Nebraskans – and Americans – vulnerable to the risks of unchecked gambling?
