Prediction Markets Leave Users With Fewer Gambling Safeguards

A Roosevelt Institute analysis published on September 22 contends that prediction-market platforms are seeking federal swaps regulations instead of state gambling laws that govern casinos in Nevada and New Jersey, as described by Kalshi, the largest US prediction-market platform. The stakes go beyond jurisdiction, as the outcome determines the types of bets users can place, the odds they're informed about, and whether safeguards against addictive gambling are applied.

Traditional gambling operators must receive permission before introducing new bets, while prediction markets self-certify contracts to federal regulators without prior approval. Although certain contracts may be barred, the analysis suggests the enforcement of these restrictions is unclear. Nevada and New Jersey cap traditional gambling at 21 and above, while prediction markets accept users starting at 18.

State gambling rules are said to be more protective than the minimal federal swaps regime proposed by platforms and the Trump administration. Nevada requires casinos to post payoff schedules, while prediction-market users are only informed about potential winnings without disclosing counterparties, trading frequency, or win-loss records.

Addiction protections also show a notable gap, with Nevada mandating problem-gambling materials and industry-funded staff training, unlike prediction markets that carry no such mandatory safeguards. Lipton suggests applying state-style gambling rules to prediction markets, which would include disclosure and addiction safeguards, while acknowledging that the underlying jurisdictional disputes between state regulators and federal swaps law remain unresolved.