Light and Wonder Urges States to Choke Off Prediction Market Payments

Light and Wonder is telling state lawmakers to stop the prediction market boom by attacking its money pipes. At the National Council of Legislators from Gaming States (NCLGS) summer meeting in San Diego on July 9, 2026, the company's Head of Government Affairs and Legislative Counsel, Howard Glaser, argued that the single strongest move states can make right now is to cut Kalshi and its rivals off from the payment processors that let players fund accounts, rather than wait for a Supreme Court decision that may be months away.

The pitch reframes a fight that has so far played out in courtrooms and gaming commissions. Instead of chasing federally-licensed exchanges through litigation they keep winning, Glaser told the room of state regulators and legislators to squeeze the "supporting ecosystem" around them: the payment platforms, marketing affiliates and media partners that keep the machine running. It is a supply-chain strategy, and it lands while the legal question of who regulates event contracts sits one step from the nation's highest court.

What did Howard Glaser actually propose at NCLGS?

Glaser proposed that states target the payment infrastructure behind prediction markets rather than the operators themselves. His logic was blunt: an exchange cannot take a customer's stake if that customer has no way to deposit money.

"You cannot run a prediction market if you can't process the payments," Glaser told the NCLGS audience, according to CasinoBeats. "If you can't touch prediction market operators, get at the supporting ecosystem."

He framed the approach as both faster and more durable than the state-by-state court fights that have dominated 2026. Payment processors, affiliates and media partners are ordinary companies that answer to state law, unlike the exchanges themselves, which claim federal cover from the Commodity Futures Trading Commission. Pressuring that layer, Glaser argued, does not require a state to first win the jurisdictional argument.

Why does Light and Wonder care about prediction markets?

Light and Wonder is one of the largest suppliers of slot machines, table systems and iGaming content to the regulated casino and sports betting industry, so prediction markets are a direct competitive threat to its customers. Every dollar wagered on a Kalshi sports contract is a dollar that does not flow through a licensed, taxed sportsbook or casino that buys Light and Wonder's products.

That gives the supplier a clear commercial reason to back the states pushing back. Its position also aligns with a growing coalition of licensed operators and investors who see event contracts as unlicensed sports betting in a financial wrapper. Earlier this week we reported how investor Michael Burry positioned bets on DraftKings and Flutter partly on the view that regulators will eventually corner the prediction market operators.

What are prediction markets, and why are states fighting them?

Prediction markets are exchanges where users buy and sell yes or no contracts on the outcome of real events, including sporting results, and cash out based on what happens. Kalshi and Polymarket are the best known names. Their operators argue these are event contracts, a class of derivative regulated federally by the CFTC, not gambling products subject to state gaming laws.

State gaming regulators see it differently. To them, a contract that pays out on which team wins a game is functionally a sports bet, and it sidesteps the licensing, tax and problem-gambling safeguards that apply to sportsbooks. That clash over classification is the heart of every case now moving through the courts.

How big have prediction markets become in 2026?

Prediction market activity has surged into the billions during the 2026 World Cup. Reporting on the sector notes that trading tied to the tournament crossed the multibillion-dollar mark across Kalshi and Polymarket, a scale that has turned what was a niche election-betting curiosity into a mainstream rival to licensed sportsbooks.

Here are the key data points shaping the debate as of July 2026:

• Multibillion-dollar-a-year industry: New Jersey Solicitor General Jeremy Feigenbaum described the sector to the Supreme Court as a "multibillion-dollar-a-year" market whose regulation is now in dispute.
• Over $2 billion on the World Cup: Coverage of the 2026 tournament reports prediction market volume on the event surged past $2 billion across the leading platforms.
• $5 million penalty in Ohio: Kalshi is challenging a $5 million penalty from Ohio's gaming regulator for what the state calls unlicensed sports betting.
• $500,000 daily exposure in Michigan: Michigan extended its ban on Kalshi sports contracts and attached fines that can run to $500,000 a day.

Where do the Kalshi court cases stand right now?

The legal picture is mixed, which is exactly why Glaser urged states not to bank everything on the courts. Kalshi has won some rounds and lost others, and the decisive question is heading toward the Supreme Court.

Jurisdiction	Status (July 2026)
Third Circuit	Ruled in Kalshi's favor on the jurisdiction question
New Jersey	Justice Samuel Alito set an August 4, 2026 deadline for the state to petition the Supreme Court in Flaherty v. KalshiEX
Sixth Circuit	A parallel decision was expected around July 30, 2026
Nevada	State Supreme Court denied Kalshi's emergency motion to halt trading restrictions
Michigan	Regulators secured a restraining order; Kalshi faces continued restrictions
Ohio	Kalshi sued the state regulator and is fighting a $5 million penalty
North Carolina	Legislature moved to apply a 6% tax on prediction market revenue

The federal government has largely backed the exchanges. CFTC leadership, including Chairman Mike Selig, has supported the argument that event contracts are derivatives under federal oversight. That federal shield is what makes suing the operators so slow and uncertain, and it is the gap Glaser's payment-processor strategy is designed to route around.

Why go after payment processors instead of the exchanges?

Because payment processors are not shielded by the CFTC argument, and they are far more exposed to state pressure. A processor that handles deposits for what a state deems illegal gambling faces a straightforward legal and reputational calculation, and most will not risk it once a state signals intent to act.

"This is a free field for you," Glaser told the lawmakers, per CasinoBeats. "And I really believe it is the strongest possible action you could take while you wait for the Supreme Court."

The tactic echoes past enforcement history. In the years after the 2006 UIGEA, US authorities choked offshore online poker and casino operators largely by cutting their banking and payment channels, not by extraditing executives. Glaser is essentially arguing that the same pressure point still works.

What did other speakers say at the NCLGS meeting?

Glaser was not alone in warning states off a wait-and-see posture. The San Diego meeting featured a lineup of gaming officials debating how aggressively to respond.

Mick Mulvaney, the former White House Chief of Staff now serving as Executive Director of Gambling Is Not Investing, told delegates not to expect Washington to solve the problem for them.

"Federal legislation is not going to be your fix," Mulvaney said, arguing the CFTC is unlikely to change course.

The session was moderated by West Virginia Delegate Shawn Fluharty, the NCLGS president, with a keynote from Nevada Gaming Control Board Chairman Mike Dreitzer and tribal perspective from Steve Bodmer, general counsel for the Pechanga Band of Indians. The through-line was consistent: states cannot assume a friendly Supreme Court ruling and should be building their own tools now.

How does this fit the wider crackdown on prediction markets?

The payment-processor idea is the newest front in a campaign that has widened well beyond litigation. In recent weeks the pressure has come from several directions at once.

Google banned prediction market ads in Michigan and New York, cutting a major marketing channel. Congress has probed Polymarket over paid election influencers, and a facial recognition betting bill now targets prediction markets alongside sportsbooks. Meanwhile the Ninth Circuit grilled Kalshi over whether its contracts amount to sports betting on tribal lands. Glaser's proposal slots neatly into that pattern: if the operators are hard to reach directly, tighten every screw around them.

What are the risks and pushback to Glaser's approach?

The main risk is legal blowback. If courts ultimately rule that event contracts are lawful federal instruments, states that pressured processors into cutting off a legal business could face challenges of their own. Prediction market backers frame the industry as legitimate financial infrastructure and argue that leaning on banks and processors is regulatory overreach that punishes lawful commerce.

Gambling industry analyst Steve Ruddock, who has written on the strategy, noted that targeting the supply lines is a powerful lever precisely because it does not wait for the jurisdictional question to be settled. That same feature is what critics find troubling: it lets states act before a court has confirmed the underlying activity is illegal in their borders.

What happens next?

The immediate calendar is tight. New Jersey's Supreme Court petition deadline falls on August 4, 2026, and a Sixth Circuit ruling was expected around July 30, so the next few weeks could reshape the whole board. If the Supreme Court takes the case, it would be the first prediction markets dispute the justices have heard, and the outcome would set national ground rules.

In the meantime, expect more states to test the payment-processor angle Glaser laid out, and expect the exchanges to fight any such move hard. The battle over prediction markets has moved past the question of whether states will resist. It is now a question of which pressure point they press first.

Updated July 2026

This report reflects statements made at the NCLGS summer meeting on July 9, 2026 and the status of prediction market litigation as of mid-July 2026. Figures and case positions are drawn from named public sources, including CasinoBeats, SBC Americas and CoinDesk.

Frequently asked questions

Who is Howard Glaser?

Howard Glaser is Head of Government Affairs and Legislative Counsel at Light and Wonder, a leading supplier of casino and iGaming products. He addressed state lawmakers at the NCLGS summer meeting on July 9, 2026.

What did Glaser propose about prediction markets?

He proposed that states target the payment processors, affiliates and media partners that support prediction markets, arguing an exchange cannot operate if players cannot fund their accounts.

Why not just sue the prediction market operators?

Because operators like Kalshi claim they are regulated federally by the CFTC as derivatives exchanges, which makes direct state lawsuits slow and uncertain. Payment processors do not have that federal shield.

What is NCLGS?

The National Council of Legislators from Gaming States is a nonpartisan group of state lawmakers focused on gambling policy. Its 2026 summer meeting was held at the Hard Rock Hotel in San Diego.

When could the Supreme Court rule on prediction markets?

New Jersey faced an August 4, 2026 deadline to petition the Supreme Court in Flaherty v. KalshiEX. If the court takes the case, it would be the first prediction markets dispute the justices have heard, though a ruling would likely come later.