“Prediction market” gambling platforms have suffered a series of blows in court over the past few weeks.
Prediction markets are companies that exploit loopholes in federal law to bring casino-style gambling to anyone with a smartphone. While traditional gambling operates under state oversight and state law, prediction market platforms claim protection under federal commodities laws.
But instead of letting people invest in futures for gold or crude oil, companies like Kalshi and Polymarket let people “invest” in the future outcome of a ballgame, tomorrow’s weather, foreign policy, and so on.
But calling it an “investment” does not change reality. When prediction market platforms let users “trade” hundreds of millions of dollars on who will win the Super Bowl, that’s gambling. But unlike other forms of gambling, prediction markets are not accountable to state gambling laws.
However, prediction markets seem to be facing more scrutiny in court.
Earlier this summer Kentucky’s attorney general announced lawsuits against Kalshi and Polymarket for “bypassing” consumer protections and tax requirements in the state’s gambling laws.
Last month, the City of Baltimore sued Kalshi and Polymarket for violating consumer protection laws “by operating illegal, unlicensed sports-betting platforms and misleading consumers about the legality and regulatory status of their products.”
The State of Connecticut has also sued Kalshi for conducting unlicensed internet gambling in violation of state law.
In August a three-judge panel from the 9th Circuit Court of Appeals ruled that federal law does not prevent states from regulating prediction markets like Kalshi.
Arkansas Attorney General Tim Griffin joined an amicus brief in that case against Kalshi. Griffin previously issued an opinion that Kalshi’s operation likely violates Arkansas law.
Earlier this month, a federal judge in Iowa rejected Kalshi’s request for a preliminary injunction to block Iowa from regulating Kalshi under state gambling laws. Like the 9th Circuit, the judge said federal law likely does not prevent the State of Iowa from regulating prediction markets.
We have written before about how prediction markets are particularly troubling. Up until now, they have operated without state oversight. In particular, sports betting is big business on prediction market platforms. This type of gambling is out of control. It’s ruining lives and corrupting sports.
It’s good to see our federal courts finally taking steps to let states restrict this type of predatory gambling.
Articles appearing on this website are written with the aid of Family Council’s researchers and writers.
