Introduction
Since 2022, Better Markets has been deeply engaged in the debates over so-called “prediction markets,” first at the Commodities Futures Trading Commission (CFTC) and then in the courts, media, at other agencies, and now virtually everywhere. Better Markets materials and information touch on virtually all aspects of these debates. They are available below with hyperlinks for ease of reference after this introduction.
Here are the top 10 points to keep in mind:
- These “prediction markets” are just a way for people to gamble with what are called “event contracts,” which are being offered by large financial firms such as Kalshi, Polymarket, and Crypto.com because they are trying to avoid the longstanding state regulation of gambling.
- These activities are no different in substance than gambling at a casino, sportsbook, or corner bookie, which is why “prediction market” users can bet on everything from elections and sporting events to the Golden Globes and the return of Jesus Christ.
- These companies have unleashed unregulated nationwide gambling without the involvement or review by any elected official, regulator, or policymaker, even though there is a very significant public interest in properly regulating gambling to keep criminals out, prevent minors from engaging in gambling, prohibit the use of nefarious gamification and AI deepfakes, deal with addiction and other social consequences like alcoholism, drug abuse, bankruptcy, spouse and child abuse and other anti-social activities often associated with gambling.
- The CFTC is a federal financial regulatory agency with no experience, expertise, personnel, technology, or budget to police gambling in all 50 states covering an unlimited number of topics, and trying to do so will distract the CFTC from its critical mission of policing the multi-trillion-dollar derivatives and commodities markets. All Americans depend on the CFTC to make sure that everyday essentials from cereal at breakfast and bread for lunch sandwiches to gas for the car and oil to heat a home are available at the right time, in the right quantities, and fairly priced based on supply and demand.
- The futures, options, and swaps subject to CFTC regulation are supposed to have genuine financial utility and a legitimate hedging function. Sport wagering event contracts don’t fill those roles. Moreover, in 2011, the CFTC flatly banned all event contracts that involve war, assassination, terrorism, gaming, or any activity that is unlawful under any State or Federal law. That means that the sports wagering event contracts so prevalent today are actually unlawful, as they involve “gaming.” As has been recently seen, these companies are now also offering event contracts that involve war, assassination, and terrorism, including involving military action in Venezuela, Iran, and elsewhere.
- Congress stated explicitly that the gambling going on now via event contracts was prohibited. When this authority was being debated in Congress, Senator Blanche Lincoln, then chair of the Senate Agriculture Committee, said that the intention was not to “enable gambling through supposed ‘event contracts,” including any event contracts on “sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament.”
- Before it flip-flopped, Kalshi itself admitted this in multiple court filings. When it wanted to defend its election betting contracts, it was quick to dismiss sports betting as merely a form of entertainment, with no “independent significance” or “economic risks.” Kalshi went further and flatly admitted that “Congress did not want sports betting to be conducted on derivatives markets.”
- Prediction market operators claim they are not casinos because people are not betting against them and so they are “not the house”; they are just bringing betters together and earning their revenue through fees. But that’s no different than casinos that bring poker players together and then take a percentage of the pot.
- Prediction market operators also claim that event contracts on sports, politics, and pop culture are legitimate financial instruments because people can use them as a hedge against risk. But these types of wagers cannot serve as real tools for hedging financial risk, and there is little if any credible evidence that Americans actually use them for that purpose. Moreover, the implication of this argument is that all bets are actually financial hedging devices, which means even traditional sportsbooks should be regulated by the CFTC, which does not make any sense.
- The potential for insider trading on these platforms is enormous. Anyone with inside information about an event can use that information to profit. And because there is always someone taking the other side of the bet, these insiders are profiting at the expense of bettors who think they have a fair shot to win their bet when they don’t.
The bottom line: much of the gambling being done via event contracts is directly against the law, and the intent of the statute, and all of it is far beyond anything the CFTC was designed or intended to do. Moreover, in a democracy, private profit-maximizing financial firms should not be allowed to unleash unregulated nationwide gambling without elected officials reviewing, deliberating, and deciding how and under what circumstances such activities should be allowed, if they are allowed at all.
Most Important/Critical Better Markets Resources
Critical resources for understanding the state of play when it comes to prediction markets, sensible rulemaking and appropriate oversight, and where we go from here.
The CFTC is Now Telling Prediction Markets How to Avoid Resembling a Sportsbook (August 7, 2026)
CFTC’s Proposal Would Open Gambling Floodgates (July 28, 2026)
There is No Reason to Enable Insider Betting on Google Searches (June 15, 2026)
Predictably, “Prediction Markets” Are Just Casinos (January 26, 2026)
Sports Betting Scandals Prove Risks of Prediction Markets (November 20, 2025)
Stop the Spread: Why the CFTC Must Shut the Door on Gambling in Derivatives Markets (May 8, 2025)
Fumbling the Ball: Why the CFTC Should Sack Super Bowl Gambling Contracts (February 4, 2025)
Gambling on Elections Threatens Our Democracy and Markets (September 10, 2024)
Comment on Proposed Rulemaking on Event Contracts (CFTC Comment Letter, August 8, 2024)
Prediction Markets did NOT Nail the 2024 Election (Interested Parties Memo, November 13, 2024)
Amicus Brief: KalshiEx, LLC v. John A. Martin, et al., (December 22, 2025)
Read on for additional resources:
Gambling, Event Contracts & the Law
What prediction markets are, why they’re gambling, why most are unlawful under the CEA, why the CFTC isn’t equipped to police nationwide gambling, and broad consumer/public‑interest harms.
CFTC Can’t Tell the Difference Between Sports Betting and Derivatives Trading (October 9, 2026)
The CFTC Thinks It Is Above The Law (August 11, 2026)
Lawless CFTC Directs Kalshi to Defy Court Order (July 14, 2026)
Kalshi’s World Cup “Trades” Were Poorly Disguised Bets (July 21, 2026)
CFTC’s Prediction Markets Rules Cement Its Role as Industry Cheerleader (June 10, 2026)
Senate Hearing on Sports Betting Shows CFTC Should Not Regulate Gambling (May 20, 2026)
Stop the Spread: Why the CFTC Must Shut the Door on Gambling in Derivatives Markets (May 8, 2025)
Prediction Markets did NOT Nail the 2024 Election (Interested Parties Memo, November 13, 2024)
Election Gambling & Threats to Democracy
Why election betting is uniquely dangerous; litigation, agency decisions, and Better Markets’ legal analysis around KalshiEx LLC v. CFTC.
Consumer Protection Groups Urge the CFTC to Ban Gambling on Elections (July 27, 2026)
Court’s Opinion in Kalshi v. CFTC Directly Threatens Our Democracy (September 12, 2024)
Gambling on Elections Threatens Our Democracy and Markets (September 10, 2024)
Court Should Affirm CFTC’s Decision to Prohibit Gambling on Elections (March 4, 2024)
Amicus Briefs
KalshiEx, LLC v. John A. Martin, et al., (December 22, 2025)
Comment Letters
Comment on Proposed Rulemaking on Events Contracts (CFTC Comment Letter, July 27, 2026)
KalshiEx, LLC’s Rule Certification Submission (CFTC Comment Letter, October 28, 2024)
Comment on Proposed Rulemaking on Event Contracts (CFTC Comment Letter, August 8, 2024)
KalshiEx, LLC’s Proposed Political Event Contract (CFTC Comment Letter, September 25, 2022)
Congress Did Not Intend Sports Betting In Derivatives Markets
Sports contracts, pop‑culture wagers, scandals, and the legal point that Congress didn’t intend sports betting in derivatives markets—plus Kalshi’s prior admissions.
CFTC’s Proposal Would Open Gambling Floodgates (July 28, 2026)
Betting on The Masters is Gambling, Not Trading a Financial Derivative (April 15, 2026)
Sports Betting Scandals Prove Risks of Prediction Markets (November 20, 2025)
Selected Media/Articles
Chiefs-Eagles Super Bowl ‘Trades’ Pit State Regulators Against Feds (Bloomberg, February 7, 2025)
Regulatory Capture, Enforcement Failures, and CFTC Oversight
CFTC capacity limits; questionable approvals; Polymarket/QCX; IG/ethics issues; FOIA requests; and the risk of diverting the CFTC from its core mission.
The SEC Must Regulate Event Contracts on Public Companies (August 25, 2026)
CFTC Collaborates with the Industries It Should Be Regulating (August 20, 2026)
Senate Hearing on Sports Betting Shows CFTC Should Not Regulate Gambling (May 20, 2026)
CFTC’s Refusal to Recognize Prediction Markets are Casinos Endangers Americans (February 5, 2026)
Congressional Testimony
Letters and FOIA
Freedom of Information Request Relating to the CFTC’s Approval of QCX as a DCM (July 28, 2025)
Better Markets Ethics Complaints Against Commissioner Pham (December 9, 2022)
What’s At Risk When Unregulated Gambling Is Unleashed Nationwide—and Beyond
Prediction markets’ push into US stocks raises regulatory alarm bells (Reuters, September 28, 2026)
Small businesses roll the dice on Kalshi to manage their risks (CBS News, September 24, 2026)
What a fake poll reveals about worries around prediction markets and the midterms (August 28, 2026)
Spotify Confirms Streaming Fraud After Kalshi Trader Cries Foul (WIRED, July 2, 2026)
Wanna bet? Washington steps up scrutiny of prediction markets (Associated Press, April 17, 2026)
Who Struck It Rich in the Markets When Trump Postponed Bombing Iran? (New Yorker, March 31, 2026)
Will ‘Sinners’ win at Oscars? When will Maduro fall? Place your bets (USA Today, February 25, 2026)
Millions in bets ride on what Trump will say, do or invade next (Washington Post, January 28, 2026)
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