.jpg)
A few years ago, Nebraskans looking to legally bet on March Madness had two choices: Go to the casino or cross state lines.
Now, they can put as much money as they want on college basketball games from their phones using DraftKings, FanDuel or any one of at least a dozen apps.
State law still bars sportsbooks from offering online gambling. But the platforms say that users of their new prediction markets aren’t “betting” — they’re “trading.”
Leaders in Nebraska’s casino industry say prediction markets have undermined the state’s prohibition on internet gambling by exploiting a legal loophole to offer unlimited wagering on sports, politics and everything in between. And they’re increasingly driving addiction for problem gamblers in the state, a local advocate said.
Users of Kalshi and Polymarket, the nation’s two biggest prediction markets, have wagered more than $97 million on Nebraska Cornhuskers men’s basketball games this season, though it’s unclear how many users were based in the state.
The two trading platforms have also hosted action on state political contests, including a combined $1.4 million in wagers on the winner of the Omaha area’s “Blue Dot” in 2024.
In the last four months, sports betting juggernauts FanDuel and DraftKings have launched their own prediction markets that look nearly identical to their online sportsbooks.
The difference between sportsbooks and prediction markets lies in who users are betting against. At a sportsbook, a gambler bets against a bookmaker who sets the odds. In a prediction market, users “trade” against their peers by buying and selling positions in future events at prices determined by supply and demand.
Prediction market platforms say this distinction means they shouldn’t be regulated as gambling operations by individual states but as commodity exchanges by the federal government.
“If we are gambling, then I think you’re basically calling the entire financial market gambling,” Kalshi CEO Tarek Mansour told Axios last year.
Under President Donald Trump, the U.S. Commodity Futures Trading Commission has agreed with the companies, claiming sole jurisdiction to regulate prediction markets.
States and Native American tribes have pushed back, arguing in pending lawsuits that prediction markets are nothing more than illegal gambling operations. In January, Nebraska Attorney General Mike Hilgers signaled his support for a lawsuit brought by three California tribes against Kalshi in a legal brief.
They’re “a loophole gone wild” designed to circumvent state rules and taxes, said Lance Morgan, the CEO of Ho-Chunk Inc. and War-Horse Casino.
“It looks like a sports bet. It quacks like a sports bet. It’s a sports bet,” Morgan said.
Overs and unders Nebraska, where legal sports betting at casinos began in 2023, is one of 19 states that still prohibits online gambling.
Before prediction markets gained popularity, thousands of Nebraskans found ways to gamble through illegal bookies and offshore sites or by crossing into Iowa, where online betting is legal, said Mike Sciandra, director of the Nebraska Council on Problem Gambling.
There’s no discernible difference between traditional sports betting and prediction markets when it comes to addiction, Sciandra said. He has already seen clients in treatment who have struggled with prediction markets.
“I think we’re only at the tip of the iceberg,” Sciandra said.
Kalshi and Polymarket users put an average of $5.5 million on each Husker football game last year, according to a Flatwater analysis.
Though sports attract most of the action, users can trade on anything with a definitive outcome, including elections, Oscar winners and oil prices. Kalshi users put $23,000 on Omaha’s mayoral election last year.
Those expansive offerings can attract Nebraskans who aren’t interested in sports — people like Braden Burns.
The Lincoln graphic designer became addicted to gambling as a teen through the video game Counter-Strike, but he largely resisted the urge to bet the last five years, he said.
A few months ago, Burns opened the Robinhood app where he has an investment account and encountered the platform’s built-in prediction market. The 28-year-old has since wagered on topics of interest, such as politics and the Oscars.
Burns said he feels like he should stop, but then he sees something on the news he wants to bet on.
“That layer of friction that I managed to maintain for the last five years is now gone,” Burns said. “The temptation is always there.”
Omaha finance executive Eric Rodawig followed prediction markets long before they hit the mainstream, but he began using Kalshi after it began offering trading on the 2024 election, he said.
Rodawig said he has enjoyed wagering on politics, sports and financial futures, but he also sees a secondary use for the platform: measuring public consensus.
When people put money on their predictions, it can reveal the “wisdom of the crowd” better than traditional polling, Rodawig said. In his job, for example, it’s useful to see what Kalshi users think will happen with federal interest rates, he said.
Rodawig believes people should be allowed to exercise free will and bet online if that’s how they choose to spend their money.
For decades, Nebraska held firm on its prohibition of casino-style gambling. But in 2020, ballot measures broke the levee, allowing racetrack-adjacent casinos to offer slot machines, card games and on-site sports betting — all taxed at 20% of gross revenue.
Since sportsbooks opened at Nebraska casinos in 2023, they have grown massively in popularity, taking in more than $9 million in revenue last year.
Still, there are some signs unregulated prediction markets could be eating into the profits of legal operations, said Lynne McNally, WarHorse’s head of government relations.
WarHorse’s sportsbooks in Omaha and Lincoln saw a 13% drop in betting on the Super Bowl this year, though the Kansas City Chiefs appearing in 2025 likely drove up wagering, a spokesman said.
In more than a dozen lawsuits, states and Native American tribes are seeking to ban Kalshi and other prediction markets. Nebraska Attorney General Hilgers joined a bipartisan group of attorneys general in a legal brief asserting that Kalshi is disregarding state and tribal authority to regulate gambling. A spokeswoman for Hilgers declined multiple requests for comment.
A Kalshi spokesman said the company is a licensed derivative exchange, like the Nasdaq, that offers financial contracts on the outcome of future events.
“There is no ‘house’ on Kalshi, a major difference that means our business model looks nothing like that of sportsbooks,” the spokesman said in an email.
A DraftKings spokesperson said in an email that the company remains “dedicated to working collaboratively with (federal) regulators to uphold the highest standards of integrity in our operations.”
