Prediction markets are gaining traction as significant financial infrastructure, drawing institutional capital despite regulatory uncertainties. Massachusetts' 2025 lawsuit against Kalshi over NFL contracts underscores the ongoing conflict between state and federal oversight. Meanwhile, Intercontinental Exchange's (ICE) investment in Polymarket is propelling event-driven trading into mainstream finance. Weekly trading volumes across major prediction market platforms have surpassed $2 billion, with Kalshi and Polymarket leading the sector. While experts suggest these markets could transform financial systems by redefining how information is valued, they also face substantial challenges from legal fragmentation and governance risks.