Prediction market platforms Polymarket and Kalshi spend a lot of time and money convincing regulators they’re not gambling.

Outside of the U.S. authorities are viewing prediction markets as synonymous with gambling. Taiwan, France, and now Singapore have all made moves to block users from accessing Polymarket at the ISP level, calling the prediction market platform an unlicensed gambling operation of some sort.

Prediction markets are investment tools, where traders take a position on the outcome to a question.

Parties and counter-parties have differing opinions on how to price the the competing sides of the question, and the market engages in price discovery. Should the event occur, each share will be worth $1, or $0 if the event fails to materialize.

This isn’t a game of chance. Prediction markets aren’t considered gambling (in the U.S.) because they are designed as tools for forecasting outcomes based on probabilities, rather than games of luck. The house doesn’t set the odds, or win. It’s all about market participants.

In the U.S., the Commodities Futures Trading Commission views its role as regulating prediction markets because it views the markets as a collection of event contracts, similar to weather derivatives – not a new invention – used by farmers to hedge against crop loss by buying into contracts that pay out in the event of freak weather. Climate change has made this a lucrative field.

Both Polymarket and Kalshi have had their own fights with the CFTC. Polymarket settled, Kalshi won. Kalshi, as a result, now has permission to offer election-based event contracts; Polymarket must block U.S. users from accessing its platform. Kalshi also now has Donald Trump Jnr. as an advisor, helping its case with regulators.

Election-based event contracts were a big business during the 2024 election. Looking back at how the Go to Source to See Full Article
Author: Sam Reynolds