Advocacy Group Says Prediction Markets Mirror Gambling Platforms

A US financial policy advocacy group has urged regulators to treat prediction markets as gambling operations rather than financial products. The criticism targets platforms that allow users to trade contracts tied to sports, political, and real world outcomes.

Good to Know

• Better Markets argues prediction markets function like gambling platforms
• The group calls for regulation under state gaming law, not federal derivatives rules
• Kalshi and Polymarket remain overseen by the Commodity Futures Trading Commission

Better Markets released a new fact sheet challenging the legal status of prediction markets operated by Kalshi and Polymarket. The document carries the title Predictably, Prediction Markets Are Just Casinos and argues the platforms rely on labeling tactics to avoid state level gambling regulation.

Benjamin Schiffrin, director of securities policy at Better Markets, said the distinction between prediction markets and gambling fails under basic examination. He said:

“Prediction markets are virtually indistinguishable from a casino, a street corner bookie, a gambling app, or any other place you can place bets. They call themselves prediction markets to avoid longstanding regulation by the states, which have regulated gambling for many decades to protect customers and reduce the involvement of organised crime and other financial predators.”

The report argues prediction markets do not resemble established financial markets such as equities or fixed income. According to Better Markets, traditional markets rely on enforceable oversight, neutral intermediaries, and clear settlement standards, none of which apply to event based contract platforms.

Schiffrin said the absence of those features undermines any claim that prediction markets operate as genuine financial venuesd:

“Real markets are properly regulated to ensure that the activity is real, that there is a level playing field, and that participants make good on their trades. That results in genuine trading and fair dealing among participants. Real markets have a regulator to prevent conflicts of interest and to stand between the buyer and seller to ensure the well-functioning of the market. None of that is applicable to these so-called prediction markets.”

Better Markets also raised concerns tied to consumer risk. The fact sheet states prediction market users skew heavily toward young men, a demographic the group describes as more vulnerable to harmful betting behavior. The document references a class action lawsuit involving Kalshi that alleges the platform targeted users displaying problematic betting patterns while presenting itself as safer than traditional sports betting.

Market integrity forms another core concern. The report argues prediction markets lack rules comparable to insider trading laws that govern stock and bond markets. Without those safeguards, the group says manipulation risks increase.

Schiffrin addressed claims that prediction markets offer superior forecasting value through crowd wisdom, saying:

“Kalshi and Polymarket contend that by letting the world know what the crowd thinks will happen, their sites provide valuable information that is more accurate than polls or prognostications. The problem is that, absent inside information, the users on these sites are no more likely to know whether a candidate will win an election or a team will win a game than anyone else.”

As an example, the report highlighted a Polymarket trade linked to events involving Venezuelan President Nicolás Maduro. Better Markets said the activity showed all the hallmarks of an insider trade. No enforcement action has been announced.

Prediction markets currently operate under oversight from the Commodity Futures Trading Commission. Industry participants point to that status as justification for nationwide access. Better Markets rejects that framework, arguing the CFTC lacks tools suited for gambling style activity.

Schiffrin said federal courts have already raised concerns about the classification of these platforms. He said:

“For these reasons, prediction markets must be properly regulated. Yet Kalshi and Polymarket claim they should be regulated by the CFTC, the financial regulator for the derivatives market. The CFTC is ill-suited to regulate what is essentially a gambling activity. Recent federal court decisions bear this out, as several judges have found these sites indistinguishable from gambling.”

Schiffrin concluded:

“Policymakers should follow the lead of these courts. Prediction markets should be recognized for what they are—unregulated, 24/7 casinos. They must be regulated as gambling operations to protect the public before it is too late.”