Better Markets Director Dubs Kalshi, Polymarket Unregulated Gambling Sites

Better Markets is a non-profit and independent organization founded in the wake of the 2008 financial crisis with a mission to promote interest in financial matters among the general population. Recently, its director of securities policy, Benjamin Schiffrin, commented on prediction markets platforms such as Kalshi and Polymarket, saying they are outright casinos.

Better Markets’ Schiffrin Says Prediction Platforms Are Casinos

In an official report titled Predictably, “Prediction Markets” Are Just Casinos, Schiffrin did not spare any critiques of the way that these platforms present themselves, and called them “unregulated gambling platforms that function like casinos.” He explained that Kalshi, Polymarket, and other similar platforms use the term “prediction markets” to circumvent various gambling regulations and laws that are designed to protect consumers, detect manipulative betting patterns, and prevent crime. 

Additionally, Schiffrin said that despite these platforms’ claims, prediction markets fail to predict the future, and users are usually no more likely to know the outcome of a particular event, such as the result of a sports event or an election. However, he argued, insiders can use these sites to profit from their knowledge, and the platforms lend themselves to insider trading.

Schiffrin also argues that real markets are properly regulated to ensure that the activity is real and that there is a level playing field. A regulator’s job is also to prevent conflicts of interest and to stand between the buyer and seller to ensure the well-functioning of the market. However, Schiffrin says that none of this is present in prediction markets.

What Does Schiffrin Propose to Be Done Instead?

Currently, the government body regulating prediction markets is the Commodities Futures Trading Commission (CFTC). Operators such as Kalshi and Polymarket have leaned into their claims of being a market, therefore falling under the CFTC’s jurisdiction, which has let them operate in all 50 states without permission from the various state gambling regulators.

However, Schiffrin argues that the CFTC lacks the capacity to regulate what is effectively a new form of gambling, a view he says is reinforced by court rulings. He also said that several judges have found these sites indistinguishable from gambling. For example, just last week, Kalshi was dealt a significant blow in Massachusetts when Suffolk County Superior Court Judge Christopher Barry-Smith ordered the platform to stop offering sports event contracts in the state.

Schiffrin concludes that policymakers should follow the courts’ lead by recognizing prediction markets for what they are – unregulated, around-the-clock casinos – and regulating them as gambling operations to protect the public before it is too late.