Prediction Markets Hit Record Volume as Kalshi Battles State Lawsuits
Prediction market transaction volumes reached record levels in March 2026, even as the sector’s leading regulated exchange confronts an accelerating wave of state-level litigation. According to data tracked by Dune Analytics, monthly transactions crossed 191 million for the month, representing a 2,838% increase against the equivalent period in 2025. Notional trading volume reached approximately $23.7 billion, up from $1.9 billion at the same point last year.
Volume Growth Driven by Geopolitical Contracts and Mainstream Visibility
TRM Labs attributed the expansion to three converging factors: broader platform accessibility, favourable federal regulatory developments, and a marked increase in media coverage of live odds. Google Finance’s integration of prediction market data has extended the reach of these instruments well beyond their traditional user base, bringing institutional-grade information flows to retail participants. The structural argument for prediction markets as price-discovery tools is being validated by volume data; the legal argument remains contested.
Kalshi also secured a new licence to offer margin trading to institutional investors during this period, a departure from the fully collateralised model that has historically defined the sector. That development is consistent with the company’s trajectory since its $1 billion funding round at a $22 billion valuation closed in late March, though it adds leverage risk to a platform already operating under judicial scrutiny.
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Dogecoin DOGE$0.1023▲1.42%Multi-State Legal Pressure Intensifies Around Federal Jurisdiction Question
Washington state’s attorney general filed suit against Kalshi on March 28, alleging violations of the state’s Consumer Protection Act, Gambling Act, and Recovery of Money Lost at Gambling Act. Attorney General Nick Brown’s office argued that “Kalshi’s website and app show consumers a range of events that they can bet on and the odds for those various events, which dictate how much the bettor will be paid out if the event occurs,” adding that this model is “exactly how sportsbooks and other gambling operations function.” The lawsuit also alleged that Kalshi’s products promoted gambling addiction and specifically targeted college students.
Kalshi filed to move the case to federal court, consistent with its position that it operates under exclusive federal jurisdiction as a CFTC-regulated exchange. Elisabeth Diana, Kalshi’s head of communications, pushed back on the characterisation of the contracts at issue: “If AG Brown hadn’t sued us ahead of our scheduled meeting with him, he would have known better than to say we offer war markets. We don’t.” Diana confirmed the suit named only a contract tied to when Iran’s former Supreme Leader would leave office. As Blockonomi reported, Nevada had already secured a temporary restraining order compelling Kalshi to remove sports, entertainment, and election contracts statewide, with a hearing set for April 3 on whether those restrictions would be extended.
Nevada’s courts also issued a preliminary injunction against Coinbase, which partners with Kalshi on event contract offerings; District Judge Kristin Luis gave Coinbase 60 days to implement technological compliance measures. Legal experts cited in reporting suggest the federal-versus-state jurisdiction question may ultimately require Supreme Court resolution, a timeline that implies months or years of operating uncertainty for the entire sector. The tightening of insider trading controls announced by both Kalshi and Polymarket in late March suggests the platforms are acutely aware that regulatory credibility is now a competitive asset, not merely a compliance obligation. The volume data confirms demand; the litigation confirms that demand alone does not resolve a foundational jurisdictional dispute that no court has yet settled with finality.
