On Thursday, Crypto.com partnered with prediction market platform Kalshi to unveil the Coalition for Prediction Markets (CPM), a fresh industry alliance dedicated to promoting federal governance of this rapidly evolving sector in response to numerous legal hurdles at the state level.

Founding members of this coalition include major players like Coinbase, Robinhood, and Underdog. The organization aims to advocate for “secure, transparent, and federally regulated access to prediction markets,” highlighting that nearly 50% of Americans under 45 have engaged with online prediction platforms.

According to CPM, the emergence of inconsistent state regulations “jeopardizes the essential protections that maintain market fairness and prevent insider advantages,” risking fragmentation within an industry currently overseen by the U.S. Commodity Futures Trading Commission (CFTC).

The coalition plans to focus initially on “strengthening the federal regulatory framework for prediction markets” and establishing “a nationwide standard for integrity – crucial guardrails preventing insider trading and ensuring equal participation for all.” Additionally, it aims to “counteract state oversights, addressing concerns related to sports, elections, and economic indicators while promoting clear, consistent standards for integrity and transparency.”

This announcement comes amid increasing confrontations with state regulators. Last week, Connecticut issued cease-and-desist orders against Kalshi, Robinhood, and Crypto.com, claiming that their sports-focused event markets classify as unauthorized gambling. Other states like Nevada, Massachusetts, Maryland, and New Jersey have echoed similar sentiments.

Experts suggest that the legal contention regarding whether states can supersede federal regulatory authority may escalate to the U.S. Supreme Court.

Crypto.com’s North America president, Matt David, remarked that the U.S. has emerged as “the leading frontier for prediction markets,” asserting that the current momentum necessitates a consolidated industry voice.

Sara Slane, head of corporate development at Kalshi, emphasized that the companies have invested years collaborating with the CFTC, as “prediction markets require robust federal safeguards to prevent insider trading, safeguard consumers, and ensure these markets remain transparent and free of corruption.” She added that Americans “deserve clarity, not fifty conflicting interpretations.”

A recent poll sponsored by Kalshi revealed that approximately 90% of participants endorse prediction markets as they currently exist, with 79% advocating for federal rather than state oversight.

Kalshi’s anticipated expansion into sports markets in early 2025 has heightened regulatory scrutiny. Currently, sports contracts comprise about 90% of trading volume on the platform, significantly boosting the company’s valuation to $11 billion. Although the CFTC has not officially sanctioned sports markets, it permits exchanges to self-certify contracts.

Meanwhile, Polymarket, Kalshi’s primary competitor, is not yet a member of the coalition, even as it readies for a comprehensive return to the U.S. market following an $8 billion valuation backed by the parent company of the New York Stock Exchange. CPM has indicated that discussions are ongoing with other potential members, though no names were disclosed.

DraftKings and FanDuel, currently developing their own prediction products and having recently departed the American Gaming Association (AGA) due to disagreements over these matters, are seen as prospective additions to the coalition. FanDuel Predicts is already operational in select states, with DraftKings Predictions set to follow suit.

Additionally, Fanatics introduced a prediction platform last week. However, PrizePicks and Fanatics Markets, both associated with Crypto.com, are not part of the coalition. Underdog, which shifted focus from traditional sportsbook operations to prediction markets, is involved through its collaboration with Crypto.com.