Why Prediction Markets Skipped Kentucky Derby 2026

Prediction market platforms that have expanded into politics, finance, and sports are noticeably absent from one of the most prominent betting events in the United States. As the 2026 Kentucky Derby approaches, major platforms such as Kalshi and Polymarket have not listed contracts tied to the race, reflecting a broader dispute between the horse racing industry and emerging prediction market operators.

As of Thursday, neither platform offered markets for the Derby winner, despite the race’s reputation as a centerpiece of the annual betting calendar. Polymarket briefly introduced a contract tied to the event but removed it soon after. The decision followed direct outreach from Churchill Downs, the company that owns the racetrack hosting the Derby.

“We reached out to Polymarket and asked for the wagers to be removed,” said Churchill Downs spokesperson Breck Thomas-Ross according to ESPN. “And Polymarket complied.”

Polymarket did not respond publicly to requests for comment regarding the removal. Kalshi, which has expanded into sports-related contracts since early 2025, has not listed Kentucky Derby markets in recent years and declined to clarify whether it planned to do so in the future.

Legal framework shapes betting limits

At the center of the standoff is the Interstate Horseracing Act of 1978, which governs wagering on horse racing and grants racetracks and related entities control over how bets are conducted. Industry leaders say this law distinguishes horse racing from other sports where prediction markets have already established a presence.

“Pari-mutuel wagering on horse racing is conducted under the Interstate Horseracing Act, which is a federal umbrella statute that essentially gives us a series of rights — call them intellectual property rights — in our content,” Churchill Downs CEO Bill Carstanjen said. “To take wagers across any forum, whether it be a sports wagering platform, another horse racing platform, or a prediction markets platform, you need our express consent. You can’t just do it without that. We haven’t agreed to provide our content to prediction markets.”

Tom Rooney, president and CEO of the National Thoroughbred Racing Association, indicated that participation from prediction markets could be possible under certain conditions but emphasized that no such agreements exist. “There is a door that could be opened,” Rooney said. “We don’t have that yet.”

Rooney also warned regulators earlier this year that offering horse racing contracts without approval could violate federal law and damage the industry’s financial structure. In a letter to the Commodity Futures Trading Commission, he argued that such activity could “cause substantial economic harm to the horseracing industry.”

The CFTC, which oversees prediction markets, has not publicly stated whether it would permit contracts tied to horse racing or how it interprets the interaction between existing laws.

Financial stakes drive resistance

The absence of prediction markets from the Derby highlights the significant economic interests tied to traditional wagering systems. Betting on the race generates hundreds of millions of dollars each year, with last year’s event producing more than $234 million in wagers on the Derby itself and over $470 million across the full week of races at Churchill Downs.

These funds play a central role in sustaining the industry. Revenue from wagers contributes to tax collections that support prize money, racetrack operations, and breeding programs. In Kentucky, a portion of each dollar wagered is redirected into the racing ecosystem, reinforcing its long-term viability.

Economists and industry participants have raised concerns that prediction markets could divert money away from these established channels. Thomas Lambert, an economist at the University of Louisville, warned that such a shift could weaken the financial foundation of horse racing.

“If too many people use these prediction markets, then the tracks are basically sunk,” Lambert said.

Because pari-mutuel wagering pools depend on collective participation, any reduction in betting volume could affect payouts and reduce interest among bettors. Over time, this could lead to smaller race fields and diminished appeal for major events.

Industry data already shows signs of strain. The number of horse races in the United States declined by nearly 5% last year, while total wagering dropped by 2%, according to The Jockey Club.

Ongoing dispute signals broader battle

The clash over Derby betting reflects a wider conflict between prediction market companies and established gambling frameworks. Platforms such as Kalshi and Polymarket operate under federal oversight through the Commodity Futures Trading Commission and have challenged state-level restrictions in court, often arguing that their contracts fall under commodities trading rather than gambling.

Horse racing presents a different challenge because it is governed by a separate federal statute that specifically regulates wagering activity. This creates a more complex legal question about how prediction markets could operate within that framework.

Industry leaders have expressed concern about the long-term implications. Dennis Drazin, chairman and CEO of Darby Development, said, “I think that the prediction market is a real threat to the horse racing industry unless we handle it correctly.”

Some observers see potential for cooperation rather than conflict. Agreements between racetracks and prediction market platforms could allow participation while preserving revenue streams. Others argue that the industry should protect its existing structure and resist outside competition.

Churchill Downs has taken steps to strengthen its position within traditional wagering. The company operates its own betting platform and maintains partnerships with major sportsbooks. It also recently expanded its influence by acquiring rights to the Preakness Stakes, further consolidating control over high-profile races.

For now, the Kentucky Derby remains outside the reach of prediction markets. The 2026 race will proceed with betting confined to established channels, underscoring the continued divide between emerging platforms and longstanding industry rules. Whether that divide narrows or deepens will depend on future legal decisions and the willingness of stakeholders to find common ground.