‘Another way to gamble money': booming prediction markets prompt confusion and concern

• Prediction markets are available in all US states to users 18+ and regulated as financial derivatives rather than gambling, avoiding restrictions that apply to conventional sports betting platforms
• Trump administration has taken a lenient stance on the industry, with Donald Trump Jr. serving as investor/adviser to Polymarket and paid adviser to Kalshi, while Trump Media plans to launch its own platform called Truth Predict
• Experts warn of gambling-related risks including financial harm and impulsive behavior, while insider trading concerns persist after suspicious bets timed around events like the Venezuela operation prompted calls for congressional regulation

Prediction Markets Boom Raises Regulatory and Gambling Concerns

Key Developments:

Prediction markets platforms Polymarket and Kalshi generated approximately $1.2 billion in combined trading volume on Super Bowl Sunday alone, signaling explosive growth in this emerging sector. Kalshi separately reached $1 billion in trading volume during the same event.

Regulatory Status:

These platforms operate in a regulatory gray area, classified as financial derivatives rather than gambling platforms. Unlike traditional sports betting—banned in states like California and Texas and restricted to users 21+—prediction markets are available nationwide to users as young as 18. They allow wagering on virtually any event, from sports outcomes to political developments and foreign policy decisions.

Political Connections:

The Trump administration has embraced the industry, with Donald Trump Jr. serving as both investor and unpaid adviser to Polymarket and paid adviser to Kalshi. Trump Media & Technology Group announced plans to launch "Truth Predict," its own prediction market platform. This marks a shift from the Biden administration, which conducted an FBI raid on Polymarket CEO Shayne Coplan's home in November 2024.

Concerns and Controversies:

• Insider Trading: Suspicious trades have raised red flags, including a $30,000+ bet on Venezuelan regime change hours before a US military operation
• Market Manipulation: Rep. Ritchie Torres introduced legislation in January to prevent federal officials from trading on prediction markets
• Gambling Risks: The National Council on Problem Gambling warns these platforms carry similar addiction risks as traditional gambling, though users may not recognize the activity as such

Market Impact:

Mainstream media outlets have increasingly partnered with these platforms, citing their odds in news coverage, particularly after prediction markets more accurately forecast Trump's 2024 election victory than traditional polls.