Google blocks prediction market ads in five states as legal battles spread
The policy change comes as operators like Underdog sue multiple states to offer sports-event contracts, claiming federal regulation exempts them.
Google has blocked prediction market operators from advertising in five states as legal cases over the regulation of event contracts proceed across the country.
Under Google’s updated advertising policy, Kalshi and other prediction market operators cannot run ads targeting residents in Connecticut, Michigan, Nevada, New York, or Ohio.
Each state has sued prediction market operators to block them from operating within their jurisdictions.
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The policy change was first reported by Dustin Gouker in his The Event Horizon newsletter and Search Engine Roundtable.
Last week, Underdog was warned that the state of Tennessee could pursue fines, civil penalties, and criminal investigations and revoke its fantasy sports operator license if the company doesn’t comply.
In response, Underdog filed a lawsuit in the U.S. District Court of the Middle District of Tennessee Nashville Division on Tuesday.
The company is asking the court to block Tennessee from prohibiting them from offering event contracts, claiming they’re regulated by the Commodity Futures Trading Commission (CFTC) and that federal regulation exempts them from Tennessee’s gambling laws.
“Any enforcement action by Tennessee would be meritless,” the lawsuit says.
In total, Underdog has sued seven states that have tried to ban the company from offering sports-event contracts: Washington, Connecticut, Massachusetts, New Mexico, Ohio, Wisconsin, and Tennessee.
Regulators challenge CFTC stance
U.S.- Nevada Gaming Control Board Chairman Mike Dreitzer has again challenged the CFTC’s argument that prediction markets should be treated differently from sportsbooks, saying contracts tied to sports results function like conventional bets.
Speaking during an Indian Gaming Association webinar on October 14, he criticised the Commodity Futures Trading Commission’s (CFTC) efforts to establish a distinct regulatory approach for event contracts.
For Dreitzer, the format in which a wager is offered does not change its underlying nature.
He compared a US$10 bet on an NFL game with a US$10 contract on the same outcome, arguing that the transactions are effectively identical.
He also questioned whether customers are always trading against other individuals.
Hedge funds, designated contract markets and affiliated trading firms may take positions against retail participants, potentially giving sophisticated players an advantage rather than ensuring a level playing field, he said.
Consumer safeguards are another concern for the Nevada regulator, as some prediction market platforms accept users aged 18.
The CFTC issued an interim final rule on October 9 excluding qualifying traditional gambling products, including sportsbook wagers and casino games, from the federal definition of a swap.
Previously, it submitted two rules to the White House Office of Management and Budget (OMB) in an attempt to clarify federal oversight of prediction markets and contracts linked to real-world events.
Adam Greenblatt, CEO of Bet MGM, believes the U.S. Supreme Court will rule against prediction markets, telling analysts that their sports event contracts go beyond what Congress intended.
“I think the key test is whether this was the intent of Congress,” Greenblatt told analysts during a third quarter earnings conference call. “I think that it will be shown to not be the case.”
Greenblatt hopes to see an outcome from the Supreme Court in the 2026-2027 session, even though the justices have yet to decide whether to hear the case.
In his comments, Greenblatt dismissed recent proposed rulemaking by the CFTC banning casino-style games on prediction markets.
“I think it’s just a matter of time before the casino-like products re-emerge in some other incarnation or just some other form,” Greenblatt said.
Sports-event contracts continue to dominate the prediction market industry, according to a recent S&P Global Market Intelligence Kagan survey.
The survey found that while just 10% of respondents traded on a yes or no exchange over the past year, 70% of users traded sports event contracts.
“Due at least in part to widespread advertising during live sporting events, 42% indicated they were aware of prediction market operators, but had not used them,” the S&P survey found.