Better Markets Calls Prediction Market Platforms Unregulated Gambling
Nonpartisan policy group Better Markets argues that prediction market platforms like Kalshi and Polymarket are operating as unregulated nationwide gambling
The debate over prediction markets is sharpening. Better Markets, a nonpartisan public interest organization focused on financial regulation, is escalating its criticism of the industry.
The group argues that platforms like Kalshi, Polymarket, and Crypto.com are not financial products at all. They are, in their view, unregulated gambling operations running nationwide without proper oversight.
As the battle between sportsbooks, regulators, and prediction markets wages on, this is a major public statement from a leading organization.
The Core Argument: It Is Gambling by Another Name
Better Markets does not mince words in its position. The organization argues that prediction market operators have packaged gambling as something else entirely. These headlines have dropped on the same day that a new bill is asking the CFTC to ban prediction markets altogether.
By calling their products “event contracts,” these platforms gain access to federal financial regulation rather than state gambling oversight.
The practical effect is significant. Casinos and sportsbooks face state licensing requirements, age verification, addiction safeguards, background checks on ownership, and consumer protection rules. Prediction market platforms currently face none of these requirements.
Instead, they are regulated by the Commodity Futures Trading Commission as derivatives exchanges.
Better Markets argues that distinction is hollow. Users on these platforms are wagering on elections, sporting events, entertainment awards, and other real-world outcomes. The organization says those activities are “no different in substance than gambling at a casino, sportsbook, or corner bookie.”
The CFTC Is the Wrong Regulator
One of Better Markets’ most pointed criticisms targets the CFTC itself. The organization does not question the agency’s competence in its core domain.
However, it argues that the CFTC is structurally unsuited to police gambling across all 50 states on an unlimited number of topics.
“The CFTC is a federal financial regulatory agency with no experience, expertise, personnel, technology, or budget to police gambling in all 50 states,” the group states. It also raises a practical concern. Diverting CFTC resources toward gambling enforcement could compromise its primary mission of overseeing multi-trillion dollar derivatives and commodities markets.
Those markets, Better Markets notes, affect everyday essentials from food prices to energy costs for ordinary Americans.
Historical Precedent Supports the Concern
Better Markets points to a 2011 CFTC decision as directly relevant to the current debate. In that ruling, the Commission prohibited event contracts involving war, assassination, terrorism, gaming, or activities unlawful under state or federal law.
The organization argues that the ruling should inform how the agency treats today’s prediction market products.
The group also cites earlier congressional discussions during the drafting of derivatives regulation.
During those deliberations, Senator Blanche Lincoln, then chair of the Senate Agriculture Committee, stated clearly that lawmakers did not intend to enable gambling through supposed event contracts, including contracts tied to sporting events such as the Super Bowl, the Kentucky Derby, or the Masters Golf Tournament.
Better Markets notes that Kalshi itself acknowledged similar distinctions in past court filings.
The platform stated that Congress did not want sports betting conducted on derivatives markets, an admission that Better Markets says undermines the industry’s broader regulatory positioning.
Consumer Harm Is the Central Concern
Beyond the legal and regulatory arguments, Better Markets frames this as a consumer protection issue. The organization argues that prediction market operators have essentially bypassed the entire public review process that normally governs the expansion of gambling.
No elected officials reviewed this expansion.
No regulators specifically designed to handle gambling enforcement approved it. No policymakers weighed the public health implications. As a result, protections that exist in the licensed gambling market, such as safeguards against minors, addiction treatment frameworks, and prohibitions against criminal operators, do not apply.
“These companies have unleashed unregulated nationwide gambling without the involvement or review by any elected official, regulator, or policymaker,” Better Markets states, pointing to associated risks including addiction, financial harm, and broader social consequences.
A Growing Coalition of Critics
Better Markets is not alone. Multiple state attorneys general, gaming commissions, and lawmakers have filed lawsuits or introduced legislation targeting prediction markets in recent months. France has condemned the platforms outright.
New Jersey and other states are actively pursuing bans.
The industry is also under scrutiny following a wave of insider trading allegations during Super Bowl LX. Kalshi has already taken enforcement action against several users. However, critics argue that self-policing is no substitute for the kind of robust oversight that governs licensed gambling.
That pressure is building. How the CFTC and Congress ultimately respond will define the future of the sector.
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