Better Markets, a US financial advocacy group, has fired a broadside at prediction markets, claiming they’re essentially unregulated gambling dressed up as legitimate trading. The nonprofit released a paper arguing that platforms like Kalshi and Polymarket have strayed far beyond what regulators ever intended to allow.

The group’s central argument is straightforward: betting on election outcomes, sports results, or award ceremonies is gambling, regardless of what you call it. Better Markets doesn’t buy the industry’s preferred terminology of ‘event contracts’ and ‘information markets.’

If you’re putting money on future events you can’t influence, you’re gambling.

What particularly irks Better Markets is the breadth of what’s on offer. Traditional sportsbooks face restrictions on what they can accept bets on. Prediction markets, operating under CFTC oversight rather than gaming regulators, allow punters to speculate on virtually anything. Golden Globe winners. Political appointments. The lot.

Peer-to-Peer Model Called a Distraction

The industry likes to highlight that users trade against each other rather than against the house. Better Markets dismisses this distinction as meaningless. They compare it to casino poker rooms, which take a rake from peer-to-peer games and are still regulated as gambling. The fee-based model used by prediction markets works the same way, they reckon.

The watchdog’s concerns extend beyond definitions. They argue the CFTC, designed to police trillion-dollar derivatives and commodities markets, has no business regulating gaming activities. The agency lacks the expertise and the mandate for this type of oversight, plain and simple.

Insider Trading Risk Highlighted

Better Markets raised a specific concern about insider trading potential. Political prediction markets, for instance, could be exploited by campaign staffers, pollsters, or officials with non-public information. Worth knowing: the CFTC framework wasn’t built to catch or prevent this type of misconduct in betting contexts.

The paper concluded bluntly: most of what’s happening on these platforms contradicts the law’s intent. All of it exceeds what the CFTC was ever meant to handle. Better Markets argues that if Americans want nationwide gambling on current events, that decision should come from elected lawmakers, not be handed to private companies through regulatory workarounds.

The criticism adds to mounting pressure on prediction markets from multiple directions. Tribal gaming operators, state regulators, and established sportsbooks have all questioned whether these platforms are exploiting regulatory gaps. The debate will likely intensify as the sector continues its rapid expansion, and honestly, things are just getting started.

What the team thinks

Carl Mitchell says:

Better Markets has a point about the blurred lines, but prediction markets have always straddled finance and gaming depending on their structure and regulatory framework. The real question isn’t whether they’re gambling, it’s whether they provide genuine price discovery and hedging value beyond mere speculation. If US regulators want clarity, they need to establish proper licensing categories rather than letting these platforms operate in grey zones that serve nobody’s interests.