Litigation Trends to Watch in 2025: Surge in Claims Over Prediction Markets, AI Retail Surveillance, and Expired Rewards Points
As the legal landscape evolves in 2025, three emerging areas are witnessing a notable uptick in litigation: prediction markets, AI-powered retail surveillance, and expired rewards points in loyalty programs. These trends reflect broader shifts in technology, consumer protection, and regulatory scrutiny, with lawsuits often centering on deceptive practices, privacy violations, and misrepresentations. Drawing from recent cases, regulatory actions, and market analyses, this overview highlights key developments, implications, and what stakeholders should monitor moving forward.
Prediction Markets: Regulatory Battles and Gambling Ambiguities
Prediction markets—platforms where users bet on outcomes of events like elections, sports, or economic indicators—have exploded in popularity, but this growth has triggered a wave of legal challenges. These markets, often framed as “event contracts” rather than gambling, are facing scrutiny over whether they violate state betting laws or federal regulations. For instance, Kalshi, a leading prediction market, saw over $2.5 billion traded on sports contracts in September 2025 alone, yet it operates outside traditional state gambling regulations, avoiding taxes and oversight. This has led to litigation arguing that such platforms are essentially illegal sports betting in disguise.
Key trends include:
- CFTC Involvement: The Commodity Futures Trading Commission (CFTC) has dropped opposition to certain markets but is hosting a roundtable in February 2025 to discuss regulation, including sports-related contracts and customer protections. This follows court rulings favoring markets like Kalshi, allowing them to expand while traditional sportsbooks like FanDuel announce their own prediction platforms.
- State-Level Challenges: Lawsuits are surging in states where prediction markets are seen as skirting gambling laws. Polymarket, for example, has opened trades on whether sports prediction markets will be banned in any US state in 2025, highlighting the uncertainty.
- Funding and Innovation Ties: The litigation funding market, projected to reach $53.6 billion by 2032, is fueling these cases, with investors betting on outcomes related to AI and regulatory shifts in prediction platforms.
Implications: Companies in this space risk class actions for deceptive marketing or unlicensed gambling, especially as political events like elections amplify trading volumes. Experts predict more CFTC oversight to legitimize markets while curbing fraud.
AI Retail Surveillance: Privacy Violations and Deceptive Claims Drive Suits
AI-driven surveillance in retail—tools for loss prevention, customer tracking, and personalized pricing—has sparked a litigation boom, with claims focusing on privacy breaches, deceptive practices, and worker misclassification. Generative AI systems that “eavesdrop” on calls or analyze shopper behavior without consent are prime targets under laws like California’s Invasion of Privacy Act (CIPA).
Notable trends:
- Wiretapping and Eavesdropping Claims: Lawsuits allege AI call center tools intercept conversations without consent, using data to train models in violation of CIPA and similar statutes. These “AI washing” cases—overstating AI capabilities—have doubled securities class actions in 2024, with 2025 projected to see more jury verdicts on bias and harm. The FTC has cracked down, settling with Evolv Technologies for deceptive AI security claims and DoNotPay for false “robot lawyer” promises.
- Worker Misclassification: AI data annotators at firms like Surge AI and Scale AI claim they were misclassified as contractors, denying benefits while training retail AI systems. Surge AI faces a class action for unpaid training and docked pay.
- Regulatory Scrutiny: New York’s Surveillance Pricing Law, effective 2025, requires disclosure of AI-set prices, leading to lawsuits against retailers for non-compliance. Federal actions highlight harms like bias in hiring AI, with FTC settlements emphasizing transparency.
Implications: Retailers risk class actions for undisclosed surveillance, with potential multimillion-dollar settlements. Experts forecast more “greenwashing”-like AI claims, urging clear policies and consent.
Expired Rewards Points: Consumer Protection Lawsuits on the Rise
Loyalty programs’ expired points are fueling class actions, with plaintiffs alleging deceptive practices under state consumer laws. New York’s 2024 law mandating 90-day notice and grace periods before changes has set a precedent, leading to scrutiny of credit card and retail programs.
Emerging trends:
- Deceptive Expiration Policies: Lawsuits claim programs like AutoZone’s unilaterally expire points without notice, violating unfair competition laws. A settlement reinstated 900,000 expired rewards, highlighting risks of uncommunicated changes. CFPB reports note a 70% spike in 2023 complaints over revocations.
- State-Specific Regulations: New York’s law exempts fraud but requires clear disclosures, allowing private actions. Similar bills could spread, demanding 45-day notices for major terms changes.
- Program Design Risks: Litigation targets false “never expire” claims, with settlements like Chase’s emphasizing compliance. Trends include auto-renewals and “quiet hour” violations in broader consumer actions.
Implications: Companies face class actions for inadequate notices, with penalties under UCL or similar. Analysts recommend annual policy reviews and clear terms to mitigate risks.
Broader Implications and Outlook for 2025
These trends underscore a common thread: Technology and consumer programs outpacing regulations, leading to deception and privacy claims. Litigation funding’s growth (to $53.6B by 2032) amplifies risks, while CFTC/FTC actions signal tighter oversight. For businesses, key strategies include transparent disclosures, consent mechanisms, and compliance audits to navigate this surge. As 2025 unfolds, expect more AI-related securities “washing” suits and state laws on rewards, with political changes potentially influencing CFTC’s prediction market rules.