Better Markets, a Washington-based financial policy organization, has escalated its campaign against prediction market operators, claiming platforms including Kalshi, Polymarket, and Crypto.com are running nationwide gambling operations under the guise of financial instruments.

The group’s core argument is straightforward: event contracts allowing users to wager on elections, sporting events, and entertainment outcomes constitute gambling activity, regardless of how operators classify them. “These activities are no different in substance than gambling at a casino, sportsbook, or corner bookie,” the organization stated, noting that users can place bets on everything from political races to the Golden Globes.

Regulatory Mismatch

Better Markets has directed particular criticism at the Commodities Futures Trading Commission, the federal agency currently supervising these platforms. The organization contends the CFTC lacks the resources, expertise, and mandate to function as a nationwide gambling regulator across all fifty states.

“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 argued. According to Better Markets, such oversight would distract the agency from its primary mission of regulating multi-trillion dollar derivatives and commodities markets that affect prices for essential goods.

The policy organization has been active in this debate since 2022, participating through regulatory filings, court proceedings, and public advocacy. Its position centers on whether event contracts tied to sports or political outcomes meet the statutory requirements of the Commodities Exchange Act, which authorizes CFTC oversight of derivatives with legitimate financial utility and hedging functions.

Legislative Intent

Better Markets points to historical precedent supporting its position. In 2011, the CFTC prohibited event contracts involving war, assassination, terrorism, gaming, or activities unlawful under state or federal law. The group also cited congressional testimony from Senator Blanche Lincoln, former chair of the Senate Agriculture Committee, who stated lawmakers did not intend to “enable gambling through supposed ‘event contracts’.” She specifically mentioned sports events including the Super Bowl and Kentucky Derby.

Worth knowing: the organization highlighted that Kalshi itself acknowledged in previous court filings that “Congress did not want sports betting to be conducted on derivatives markets.”

Market Oversight Questions

The crux of Better Markets’ concern extends beyond regulatory classification. It’s about broader governance issues, in practice. The group argues prediction market operators have effectively launched nationwide gambling services without input from elected officials or traditional gaming regulators, bypassing the consumer protection frameworks typically required for betting operations.

This regulatory gap, Better Markets contends, creates risks around age verification, criminal enterprise involvement, addictive design practices, and social consequences associated with problem gambling. All areas where state gaming commissions typically maintain oversight.

The debate highlights a fundamental question facing financial regulators and policymakers: whether novel market structures offering wagering on real-world events represent legitimate financial innovation or gambling services requiring traditional gaming oversight. As prediction markets continue expanding, that distinction will likely face further legal and regulatory scrutiny.