Prediction Markets Under Fire from State Lawmakers

State lawmakers have been riled up by online prediction markets, particularly Kalshi and Polymarket, which they claim are more like sportsbooks than commodity markets. At a recent summit of state lawmakers, legislators publicly scolded these platforms for allegedly allowing gamblers to place bets on events while skirting state gambling regulations.

Kalshi and its competitor, Polymarket, argue that they operate as commodity markets, offering contracts to speculate on future prices of commodities like corn or oil. However, states reject this characterization, pointing out that the platforms allow people to bet on sports events, which are subject to state regulation and taxation.

The issue has sparked action from state regulators, new legislation, and lawsuits from both states and the Trump administration. The White House recently announced that a staffer who made bets using inside information was no longer employed by the president. Several states have implemented restrictions on their employees' use of prediction markets for betting purposes.