Key Highlights
- U.S. lawmakers led by Rep. Kevin Mullin called on the FTC to investigate prediction market platforms.
- The letter raises concerns that firms like Kalshi and Polymarket may be engaging in deceptive marketing practices.
- Lawmakers argue the platforms market themselves as sports betting products while claiming to be financial instruments before regulators.
A group of U.S. lawmakers has formally asked the Federal Trade Commission (FTC) to investigate whether online prediction market platforms are engaging in unfair or deceptive business practices that could potentially mislead consumers. The effort is being led by U.S. Representatives Kevin Mullin of California and Gabe Vasquez of New Mexico, who argue that the rapidly growing prediction market industry may be presenting conflicting messages to regulators and the public.
In a letter sent to the FTC, lawmakers expressed concerns that companies operating prediction markets are advertising themselves similarly to sports betting platforms while simultaneously arguing in court and before regulators that their products should be treated as financial instruments rather than gambling products.
Sector’s growth warrants higher regulations
Prediction markets allow users to buy and sell contracts tied to the outcome of real-world events, including elections, sporting events, economic data releases, and geopolitical developments.
The industry has expanded rapidly since leading platforms such as Kalshi and Polymarket began offering sports-related event contracts in 2025. According to lawmakers, the sector grew into a billion-dollar industry within a year as users flocked to wager on outcomes surrounding major events such as the World Cup and Super Bowl.
The lawmakers argue that this growth has raised important questions about consumer protection and regulatory oversight. “In a world where sports gambling has become increasingly widespread, consumers deserve clear and honest information about the platforms they are using,” Rep. Mullin said.
“These prediction market companies are presenting themselves differently to regulators than they are to the public, and that kind of contradictory messaging can mislead consumers about what rules and protections actually apply.”
Rep. Gabe Vasquez raised additional concerns regarding the impact of prediction markets on tribal gaming operations and regulated gambling industries. “Prediction market companies and their unregulated gambling are building a new class of billionaires and ripping off our Tribes,” Vasquez said.
The comments reflect growing tensions between prediction market operators and traditional gambling stakeholders, who argue the platforms are offering betting-like products without complying with state gaming regulations.
Specific focus on Kalshi and Polymarket
The letter specifically references Kalshi and Polymarket, two of the most prominent prediction market platforms operating in the United States and globally.
According to lawmakers, both companies have argued in legal proceedings that their contracts should be classified as financial products or investment tools rather than gambling products, placing them outside many state gambling regulations.
At the same time, lawmakers claim the platforms have used marketing language commonly associated with sports betting, including phrases such as “legal betting” and “betting on sports without a sportsbook.”
The lawmakers argue that this dual messaging could confuse consumers about the nature of the products and the protections available to them.
What lawmakers want from the FTC
The lawmakers asked the FTC to provide information on several issues related to prediction markets, including:
- Whether the agency has taken or plans to take enforcement actions against prediction market operators.
- Whether the FTC differentiates between betting and gambling when evaluating deceptive business practices.
- Whether public perception and companies’ legal filings are considered when determining potential consumer deception.
- Whether the FTC has received complaints related to prediction market platforms.
The letter suggests lawmakers want regulators to examine whether consumers are being given a clear understanding of the risks, legal status, and protections associated with prediction market trading.
Earlier scrutiny adds pressure
The FTC request comes as prediction markets already face growing scrutiny in Washington. Earlier this year, House Oversight Committee Chairman James Comer sought records from Kalshi and Polymarket over KYC controls, suspicious trading activity, and contracts tied to military and geopolitical events.
Lawmakers said the inquiry was aimed at understanding how the platforms prevent market manipulation and insider trading risks.
The latest FTC request expands those concerns beyond market integrity and into consumer protection, as regulators face increasing pressure to determine how prediction markets should be regulated.
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