Prediction markets like Kalshi and Polymarket are booming, and so is a fight among regulators, lawmakers, and advocates over their legality.

The political fight in the US over the future of prediction markets like Polymarket and Kalshi has escalated into a full-blown war, and battle lines aren't being neatly drawn along party lines. Instead, conservative Mormons have aligned themselves with Las Vegas bigwigs and MAGA royalty is siding with liberal Democrat lobbyists. One side argues that the platforms are breaking the law by operating as shadow casinos. The other insists they are just giving people access to legitimate financial markets already subject to adequate government oversight. Neither camp is backing down.

Right now, prediction powerhouse Kalshi operates in all 50 states. Its primary rival, Polymarket, was banned from the US in 2022 for operating as an unregistered derivatives market, but it returned in a limited capacity last year. These companies offer “event contracts” to customers, allowing them to trade shares tied to the outcomes of almost anything, from who will win this year’s Oscar for Best Actor to what the price of Bitcoin will be at the end of the day. The most popular category by far is sports. Kalshi reported a daily record of over $800 million in trades on Super Bowl Sunday related to the game alone, and over $1.3 billion traded on contracts related to the event altogether.

Once a niche financial experiment, prediction markets have rapidly become entrenched in mainstream culture, a transformation that has brought vast sums of money into play. The industry’s leading players are already billion-dollar companies in their own rights. Each day, casual speculators and die-hard sharps log on to predict where the world will go next, choosing between a dizzying array of opportunities to win and lose.

...read more at archive.is