Regulatory Scrutiny Intensifies as Better Markets Declares Prediction Markets a Form of Unregulated Gambling

Better Markets, a non-partisan, non-profit organization established in the wake of the 2008 financial crisis, has forcefully entered the ongoing debate surrounding prediction markets, unequivocally labeling them as "gambling." This stance positions Better Markets alongside other critics of the sector, including the American Gaming Association, the Gambling Is Not Investing advocacy group, and various state gaming regulators who have similarly voiced concerns.

In a detailed analysis on its official website, Better Markets asserted there is no ambiguity regarding the true nature of prediction markets. The organization contends these platforms offer a mechanism for individuals to engage in "event contracts," marketed by firms such as Kalshi, Polymarket, and Crypto.com. The core accusation is that these entities aim to bypass long-standing state-level gambling regulations through this model.

Better Markets further argued that the fundamental mechanics of prediction markets are substantively indistinguishable from offerings in traditional casinos, licensed sportsbooks, or even "corner bookies." The group highlighted the vast scope, noting participants can wager on an extensive array of outcomes, from cultural events like the Golden Globes to sports contests, and even highly unconventional propositions.

The non-profit contends that the unchecked proliferation of these platforms constitutes "unregulated nationwide gambling," which has not undergone proper review by relevant regulatory bodies, policymakers, or elected officials. Addressing the Commodity Futures Trading Commission’s (CFTC) role, Better Markets expressed skepticism, claiming the federal agency lacks resources to effectively regulate this sector across all 50 states, reiterating its gambling classification.

Moreover, Better Markets cited a Congressional directive explicitly prohibiting gambling via prediction markets, yet observed that companies continue to offer such contracts. The organization highlighted that Kalshi, a significant player, has implicitly acknowledged Congressional opposition. Better Markets referenced instances where Kalshi, defending its election betting contracts, differentiated sports betting as mere entertainment, admitting that "Congress did not want sports betting to be conducted on derivatives markets."

A critical concern raised by Better Markets involves the potential for insider information to compromise market integrity. The group warned that individuals with private knowledge could unfairly profit. This threat is evident in recent incidents: a MrBeast editor was suspended for such an offense, and military personnel in both the United States and Israel have been implicated in possibly leveraging confidential intelligence regarding military operation dates for financial gain. Companies in the sector are reportedly increasing efforts to detect and address such abuses.