A survey of 4,506 US citizens found widespread opposition to prediction market contracts tied to elections, military action and government policy, as courts and regulators weigh where the products fall under gambling and financial rules.
Six in 10 respondents opposed markets on US election results. Opposition was higher for contracts on military action, at 65%, and wagers on government policy announcements, at 63%. The poll also found that 75% viewed wagering on real-world events through prediction markets as gambling.
Views on sports contracts were more divided, but opposition still exceeded support: 43% opposed them, compared with 29% who supported them.
CFTC draws lines around its remit
Prediction market operators have argued that their contracts can be offered under federal oversight by the Commodity Futures Trading Commission (CFTC). But lawmakers and regulators have challenged sports contracts in particular, arguing that they amount to sports betting without the required licence or are offered in states where online sports betting is prohibited.
The CFTC said this week that casino-style gambling products and sportsbook wagers are expressly excluded from the definition of a swap. Chair Michael Selig said: “Casino-style gambling products are not derivatives. Just as the CFTC has done with respect to other products historically regulated by the states, the Commission today provides clarity regarding the limits of its regulatory remit by codifying the exclusion of casino-style gambling products from the ‘swap’ definition.”
On the same day, the commission proposed defining financial swaps to cover wagers on sports, politics, culture and weather, and opened a public consultation on the proposal. Selig said Americans use event contracts to “hedge risks, speculate and provide the public with information about the outcome of future events”.
Kalshi case could reach Supreme Court
The wider dispute over prediction markets is expected to go before the Supreme Court. New Jersey asked the court to review a 3rd US Circuit Court of Appeals ruling that blocked the state from applying its gambling laws to Kalshi.
Attorneys general from 39 other states and the District of Columbia filed a brief supporting New Jersey. The NFL has also urged the Supreme Court to hear the case, saying it wants clarity amid concerns that current federal rules do not equip the sector to protect the integrity of sports.
In its brief, the league argued that sports-related event contracts are sports gambling, not swaps. It asked the court to decide whether sports prediction markets should be regulated federally or by states before the NFL season ends in January.
