The first half of 2026 underscored how quickly the sports and gaming industries evolve and how hard it is for existing legal frameworks to keep pace. This article surveys the five developments we view as most consequential between January 1 and June 30, 2026: (1) the escalating jurisdictional fight over prediction markets, now gaming law’s biggest battleground; (2) the emergence of responsible gaming as a standalone regulatory priority; (3) growing antitrust and gambling-related challenges to NCAA eligibility rules; (4) soaring franchise valuations and the wave of sports deals they are fueling; and (5) the new legal risks that artificial intelligence (AI) is creating across sports and gaming. Together, these trends point to a second half of the year defined by the tensions among innovation, consumer protection and competitive growth. 

Sports-Event Contracts Become Gaming Law’s Biggest Battleground

The prediction-market fight escalated sharply in the first half of 2026. This reflects both rapid market growth and a fundamental jurisdictional dispute: whether sports-event contracts listed on CFTC-regulated exchanges are federally regulated derivatives, as the platforms and the CFTC contend, or unlawful sports betting subject to state gaming law, as many states and tribes argue. As we’ve previously written,¹ the prediction markets fight did not emerge in a vacuum. It followed the 2024 decision from the US District Court for the District of Columbia in KalshiEX LLC v. CFTC that permitted Kalshi to offer event contracts tied to the outcome of the November 2024 congressional elections on its CFTC-regulated platform.² By 2026, that backdrop had set the stage for a much broader clash over sports-event contracts. The CFTC took a series of increasingly concrete steps in 2026. In February, the CFTC filed an amicus brief in the Ninth Circuit, arguing that exchange-traded event contracts are swaps subject to the Commission’s exclusive jurisdiction, such that conflicting state regulation is preempted.³ To date, the CFTC has filed amicus briefs in three cases. The Commission then followed that litigation posture with a broader regulatory initiative, issuing an Advance Notice of Proposed Rulemaking seeking public comment on prediction markets more broadly, and its staff published a related advisory directed to designated contract markets.⁴ In June, the CFTC followed with a Notice of Proposed Rulemaking (NPRM) proposing amendments to its Part 40 rules governing event contracts—including a definition of “gaming” and a rule addressing when an event contract “involves” an underlying activity—thereby moving from general information-gathering to a more concrete framework for evaluating event contracts.⁵ The proposal adopts a three-step inquiry: whether the product is an event contract, whether it “involves” an enumerated activity such as gaming or unlawful conduct, and, if so, whether the contract is contrary to the public interest.⁶ 

Importantly, the NPRM does not impose a categorical ban on sports-event contracts. Instead, it takes a more permissive view of contracts tied to broad, objective outcomes, while indicating that contracts linked to player injuries, officiating decisions, discrete in-game events, youth sports or similar integrity-sensitive subjects are more likely to be found contrary to the public interest. At the same time, litigation accelerated across the country. The disputes now span more than a dozen states and several tribal actions, and they generally fall into four buckets: federal preemption suits brought by exchanges, direct state enforcement actions, affirmative CFTC lawsuits asserting exclusive federal authority, and newer taxation disputes. The decisions to date are mixed. Kalshi and other platforms have secured meaningful wins in some jurisdictions, including New Jersey, Tennessee and Arizona, where courts accepted or appeared receptive to federal preemption arguments.⁷ But states have prevailed or gained momentum elsewhere, including Massachusetts, Maryland, Ohio, Nevada and, most notably, Michigan.⁸ On June 25, 2026, the US District Court for the Western District of Michigan granted a motion to remand Michigan Attorney General Dana Nessel’s enforcement action to state court, holding that Michigan’s claims arise under state law and rejecting Kalshi’s theories of federal-question and complete-preemption jurisdiction.⁹ The court remanded the case to state court, emphasizing that Kalshi’s Commodity Exchange Act preemption arguments are defenses rather than a basis for federal jurisdiction. Shortly thereafter, a Michigan state court granted the Attorney General’s request for a temporary restraining order, prohibiting Kalshi for 14 days from offering or advertising its sports-event contracts in the state—subject to a $120,000-per-day fine for noncompliance with geolocation requirements—while the litigation proceeds.¹⁰ These rulings marked one of the most significant state victories to date in the prediction-market litigation and stand in sharp contrast to the results Kalshi has obtained in several other jurisdictions. Meanwhile, the CFTC has gone on offense, suing states including Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island and New Mexico to defend what it claims is its exclusive jurisdiction over designated contract markets.¹¹ As of the end of June, prediction markets remain legally active but deeply unsettled, with the rulemaking and the appellate cases likely to determine whether a durable federal framework emerges or whether state gaming regulators retain broad authority to restrict or shut down these products.

Responsible Gaming Shifting From Compliance Issue to Regulatory Priority

Responsible gaming was once treated largely as a compliance obligation attached to gambling regulation. In the first half of 2026, however, it increasingly became a standalone policy objective in its own right. Legislators and regulators across the country advanced a growing number of initiatives designed not simply to inform consumers about gambling risks but to actively shape how operators market, onboard and interact with players. The result is a noticeable shift in regulatory thinking: Responsible gaming is no longer viewed solely as a disclosure issue but is seen as an area where regulators may impose substantive restrictions on products, promotions and customer engagement practices.

New York has emerged as one of the leading laboratories for these developments. New York lawmakers considered a broad package of responsible-gaming legislation in 2026. Two measures passed both chambers and were sent to the Governor: One would require online sportsbooks to provide monthly statements showing a customer’s deposits, wagers, winnings and losses, net results, login time, promotional credits, and access to lifetime wagering history; the other would allow customers to request self-exclusion electronically.¹² Other proposals—including enhanced know-your-customer and responsible-gaming requirements, expanded advertising restrictions, and limits on gambling advertisements directed to minors—advanced in one chamber but did not pass before the legislative session ended.¹³

Separately, the New York State Gaming Commission released draft regulations addressing underage access and operator responses to potentially problematic play.¹⁴ The proposals would impose additional age-assurance and biometric-verification requirements and identify 11 player behaviors that could trigger escalating interventions, from providing responsible-gaming information to requiring educational content or suspending an account pending direct outreach.¹⁵ The Commission also proposed prohibiting the use of AI-powered services to offer personalized promotions or suggested wagers.¹⁶ These provisions raise practical questions about how behavioral indicators should be calibrated, how required interventions should be delivered and how individualized reviews can be administered consistently at scale.

Other jurisdictions are pursuing similar goals through different mechanisms. Massachusetts adopted requirements governing how sportsbooks communicate wagering limits to customers and continued to focus on responsible-gaming controls as part of broader regulatory initiatives. The Massachusetts Attorney General also proposed updated fantasy-contest regulations that would expand responsible-gaming requirements, strengthen youth protections, and impose additional safeguards relating to deposits, advertising and player controls.¹⁷

Several states also are beginning to target specific gambling products and player behaviors that they believe create heightened risk. Colorado enacted restrictions affecting promotional communications and wagering activity, while New Jersey and other jurisdictions are considering measures directed at promotions, micro-betting and other forms of engagement believed to encourage impulsive play.¹⁸ At the same time, some regulators are exploring intervention-based frameworks that use behavioral indicators to identify potentially risky gambling activity and trigger customer outreach.¹⁹

Taken together, these developments suggest that the next phase of gaming regulation may focus less on market expansion and more on consumer protection. While many of the current proposals remain controversial and their ultimate scope is uncertain, the broader trend is difficult to miss. Regulators are increasingly willing to scrutinize marketing practices, player analytics, responsible-gaming technologies and product design choices. Operators should expect responsible gaming to remain a central focus of state legislatures and gaming regulators as they look for new ways to address concerns about gambling-related harm.

NCAA Eligibility Restrictions Face Growing Antitrust and Gambling Challenges

The NCAA has prevailed in approximately two-thirds of eligibility cases against it, but athlete challenges continue to shape the legal landscape. In April 2026, President Trump signed an executive order addressing the duration of college athletes’ eligibility and the frequency with which collegiate athletes may transfer between schools. Since then, athlete eligibility has become one of the defining legal battlegrounds in college sports. Several college athletes have sought injunctive relief to compete for additional NCAA seasons, often framing their claims as Sherman Act challenges. Their core argument is that NCAA eligibility restrictions unlawfully limit access to the college sports labor market without sufficient procompetitive justification.

On June 23, 2026, the NCAA adopted a rule that allows Division I athletes up to five years of eligibility if they enroll in college no later than the academic year after their 19th birthday.²⁰ More legal challenges followed, including a class action by 11 students who were denied an additional year of NCAA athletics after exhausting their four years of eligibility in the 2025–26 season. Another federal antitrust class action challenges the age criteria of the eligibility model. Although the NCAA has prevailed in several of the recent eligibility cases, the active 2026 docket shows that athlete challenges to NCAA rules are likely to continue in the near term. These pending eligibility suits make the Protect College Sports Act a key development to watch as it heads to the Senate floor.²¹ With its similar five-year parameter for athlete eligibility, this bill could help solidify the NCAA’s new rule change and impact the trajectory of at least some of the ongoing litigation.

Eligibility disputes are also emerging in the gambling context, providing another pressure point as sports betting becomes more prevalent. In a case filed on May 18, 2026, Texas Tech quarterback Brendan Sorsby sued the NCAA after receiving a lifetime ban for gambling activity, including bets involving his own team. On June 18, 2026, however, Sorsby dropped his lawsuit against the NCAA so that he could apply for the NFL’s supplemental draft, which is available only to players who are ineligible for NCAA competition. Separately, on June 15, the Big 12 filed suit against Texas Tech University, seeking a declaratory judgment that the conference may invoke its authority under its bylaws to sanction Texas Tech for its handling of Sorsby’s sports-betting conduct. Shortly thereafter, the NFL announced that it would not hold a supplemental draft this year, and the Canadian Football League indicated that Sorsby would not be permitted to play there either. Because players must now enter the NFL through a draft, Sorsby will have to wait until next year to pursue that path. Sorsby’s story and the related litigation underscore how gambling-related eligibility issues can quickly extend beyond athlete discipline to disputes among conferences, schools and governing bodies.

NCAA eligibility rules remain a major source of legal uncertainty, and as athlete challenges, gambling-related discipline and federal legislative proposals continue to unfold, eligibility disputes are likely to remain a central flashpoint in college sports.

Soaring Team Valuations Fuel a New Wave of Sports Deals

Sports franchise valuations are soaring, with the value of NFL, NBA, NHL and MLB franchises rising 16.9% over the past year. As of early 2026, three NBA franchises are worth over $10 billion, and the WNBA has reached its first billion-dollar franchise in the Golden State Valkyries.²² This surge in valuations is driving transaction activity, with the Seattle Seahawks finalizing a sale during July 2026 for over $9 billion, pending NFL owner approval. The San Diego Padres also recently reached an agreement to sell at an MLB record $3.9 billion pending league approval. Private equity firms, undeterred by rising valuations, are increasingly active in financing transactions and acquiring minority stakes in sports franchises. This momentum is widely expected to continue. The World Economic Forum predicts that the value of the sports economy will nearly quadruple to $8.8 trillion by 2050.²³

Several structural factors are driving this sustained growth. Professional sports franchises remain scarce, durable assets with predictable revenue streams and loyal fan bases. Cities are increasingly motivated to compete to host sports teams, with the WNBA’s Sun and the NFL’s Chiefs and Bears planning moves across state lines. Finally, live sports content has emerged as uniquely resilient in the face of technological disruption, as it is less susceptible to displacement by AI-generated alternatives and continues to command premium viewership. These dynamics are enabling leagues and rights holders to expand into new markets and extract higher fees in media and sponsorship agreements.

The 2026 FIFA World Cup provides a clear illustration of these tailwinds. This year’s tournament expanded the field from 32 to 48 for the first time, increasing the number of matches and broadening its commercial footprint. And in the time since Fox secured US English-language broadcasting rights for $485 million over a decade ago, the value of these rights has nearly tripled.²⁴ For future World Cups, FIFA is well positioned to command significantly higher fees for its broadcasting rights, reflecting both the expanded scale of the tournament and the continued premium placed on live global sports content. While FIFA may be the most prominent example, these dynamics are playing out across the broader sports industry.

AI Creates New Legal Risks Across Sports and Gaming

AI is quickly becoming a legal pressure point across the sports and gaming ecosystem. In sports, the most visible first-half 2026 developments involved AI-generated or AI-modified content. Third parties increasingly used AI to exploit athlete likenesses without consent, raising questions under NIL, right-of-publicity, defamation, false-light and false-endorsement doctrines. In February, for example, the White House posted an AI-altered video of a US hockey player disparaging the Canadian team following the Olympic gold medal game, reportedly without the athlete’s consent. No legal action followed, but similar uses of athlete likenesses have prompted cease-and-desist letters and illustrate how quickly synthetic sports content can create legal exposure.

AI-generated promotional content is also moving into mainstream sports marketing. In June, the UFC promoted its White House event with a video generated entirely through AI, except for archival fight footage. Although that use case may be less legally fraught than unauthorized athlete-likeness videos, it still raises questions regarding disclosure, false endorsement and the treatment of AI-generated commercial speech. Those concerns become more pronounced when synthetic content implies an athlete, celebrity or brand affiliation that has not been authorized.

A more troubling sports use case involves athletes using AI to fabricate or enhance their own performances. Recent reporting has described AI-modified recruiting videos featuring altered jersey numbers, increased ball velocity and plays that never occurred.²⁵ Those practices threaten to undermine trust in recruiting materials and highlight reels and could create both disciplinary and legal consequences. Depending on the circumstances, fabricated performance videos may implicate college-sports rules governing unethical conduct and, where scholarships or other financial benefits are obtained through materially false representations, potentially broader fraud theories.

Meanwhile, regulators in the gaming space have taken an interest in industry adoption of AI. In March 2026, the New York State Gaming Commission released a pre-proposal for responsible-gaming rules that would prohibit licensed gaming facilities, sports-wagering platform providers and operators, video lottery gaming agents, racing entities, and lottery courier services from using “artificial-intelligence-powered services” to offer personalized promotions, suggested wagers or suggested wager amounts to customers or potential customers.²⁶ Massachusetts has not gone as far, but its sports-wagering data privacy rules already regulate adjacent conduct by restricting operators’ use of confidential patron information to promote specific wagers or promotional offers and by prohibiting the use of AI and similar technologies that are known or reasonably expected to make a sports-wagering platform more addictive.²⁷

The emergence of prediction markets adds another layer to the AI debate. As event contracts become more liquid and attract increasingly sophisticated participants, regulators are likely to focus not only on consumer-facing AI applications but also on market-facing uses of AI, including automated trading strategies, AI-assisted surveillance, settlement verification and the use of nonpublic information. The CFTC’s 2026 prediction-market initiatives already emphasize market integrity, manipulation risk, event-contract monitoring, settlement criteria and information asymmetries.²⁸ Those concerns will only become more complicated if market participants or exchanges begin deploying AI systems at scale.

Taken together, these developments suggest that AI regulation in sports and gaming is likely to develop along three overlapping tracks. The first is content and likeness, including synthetic videos, NIL rights, false endorsement and disclosure obligations. The second is consumer protection, including personalized promotions, suggested wagers, player profiling and responsible-gaming interventions. The third is market integrity, including automated trading, surveillance, manipulation detection and information-control issues. Existing law is already being tested across all three categories, and the first half of 2026 suggests that athletes, leagues, schools, operators, platforms and regulators should expect AI to become an increasingly important feature of sports and gaming disputes in the years ahead.

Looking Ahead

The first half of 2026 highlighted both the rapid pace of change across the sports and gaming sectors and the growing strain that change places on existing legal and regulatory frameworks. In the months ahead, regulators, courts and lawmakers are likely to play a prominent role in shaping outcomes across prediction markets, responsible gaming, athlete eligibility, franchise investment and AI governance. At the same time, continued growth in sports valuations, media rights, private capital investment and emerging technologies is likely to create new opportunities alongside new compliance and litigation risks. Soaring valuations mean that the stakes in this context have never been higher, and we expect the issues at the forefront of the sports and gaming sectors to remain dynamic through year-end.