Skirting the Rules, or Above Board? Understanding Prediction Markets
Professor of Law Raff Donelson: Predictive markets are forums where parties, whether they鈥檙e individuals or groups, can make wagers, if you like, about future events.
They usually involve some platform, like Polymarket or Kalshi, that facilitates people making basically peer-to-peer wages.
Commodity Futures Trade Commission is a federal agency that does regulate prediction markets. They鈥檙e allowed to block certain trades if they involve certain subjects like, say, war, assassination, or gaming.
States are trying to regulate prediction markets for a variety of reasons. They reason that, because prediction markets are operating like institutions of gambling, that they should follow state law regulating gambling, in particular to get a license through the state and then adhere to other state regulations.
So one kind of question is whether the federal government will win the lawsuit that is just filed against several states that are attempting to regulate prediction markets as gambling. I think the federal government has a strong argument that this is just futures trading that is solely regulable by the federal government.
