Americans now spend more on gambling than movies, museums, art, and music combined, and a legal fight over prediction markets is bad news for anyone hoping states can rein it in.

• New York is suing Kalshi, calling it an illegal unlicensed gambling operation dressed up as a "prediction market."
• Kalshi wants the case moved to federal court and eventually the Supreme Court, which is likely to rule that these markets are legal nationwide and off-limits to state regulation.
• Kalshi says it just lets people hedge risk, but most of its trades are plain sports bets — users have lost about $294 million this year, with parlay-style bets almost always losing.
• The tax stakes are huge: New York taxes traditional gambling at 23%, while Kalshi pitched a 6% rate, and had dangled up to $10 billion in state revenue before talks collapsed.
• Even the NFL is asking regulators to do more about insider trading, warning that bets on drafts, refs, and outcomes could undermine trust in the games.

Outlook: If the Supreme Court sides with Kalshi as expected, sports betting becomes legal across the country with little states or voters can do to stop it.