this was only a matter of time after that ohio ruling. if state courts keep classifying event contracts as sports bets rather than CFTC-regulated derivatives, kalshi is gonna face this in every state with restrictive gambling laws. the irony is prediction markets are arguably less 'gambling' than a DraftKings parlay — at least event contracts have a clear binary outcome with transparent pricing. but the existing sportsbook lobby has every incentive to keep prediction markets classified as gambling competitors
The distinction used to be that CFTC regulated event contracts require settlement against an objective outcome, while gambling is more about chance. But state AGs are arguing that when you bet on who wins an NBA game thats functionally identical to a sports bet regardless of the contract structure. Hard to disagree with that tbh.
As much as I see these 'prediction markets' as thinly veiled gambling, I agree. What both have in common is a direct buyer and seller, a seller whom thinks the item will become worth less, and a buyer who thinks the opposite. Kalshi just skims the transaction fees.
If you view it in those terms, it's really not much different than the stock market/broker relationship. Surely someone will say 'well at least stocks are ownership', let me introduce you to derivatives.
The real question I guess is how we come to terms with house gambling/prediction markets/stock markets being three sides of the same coin and how to regulate that.
I find derivatives on stocks extremely weird. I do get idea of primary market with goods. That can be useful, even there secondary market might be reasonable. But once it goes beyond use by primaries maybe it should be banned. So you should hold or at least have clear plan to produce the goods you buy or sell. So at least one side of the trade would have to have real stake in the game. And everything should be delivered not just settled.
Having puts for stuff you do not have. Or buying calls from someone who does not have it just feels pure speculation thus gambling not hedging.
this was only a matter of time after that ohio ruling. if state courts keep classifying event contracts as sports bets rather than CFTC-regulated derivatives, kalshi is gonna face this in every state with restrictive gambling laws. the irony is prediction markets are arguably less 'gambling' than a DraftKings parlay — at least event contracts have a clear binary outcome with transparent pricing. but the existing sportsbook lobby has every incentive to keep prediction markets classified as gambling competitors
I fail to see the difference between prediction markets and day trading. Both rely on news/events, order books, and sentiment.
Last time I checked the differentiator is whether skill is involved.
The distinction used to be that CFTC regulated event contracts require settlement against an objective outcome, while gambling is more about chance. But state AGs are arguing that when you bet on who wins an NBA game thats functionally identical to a sports bet regardless of the contract structure. Hard to disagree with that tbh.
As much as I see these 'prediction markets' as thinly veiled gambling, I agree. What both have in common is a direct buyer and seller, a seller whom thinks the item will become worth less, and a buyer who thinks the opposite. Kalshi just skims the transaction fees.
If you view it in those terms, it's really not much different than the stock market/broker relationship. Surely someone will say 'well at least stocks are ownership', let me introduce you to derivatives.
The real question I guess is how we come to terms with house gambling/prediction markets/stock markets being three sides of the same coin and how to regulate that.
I find derivatives on stocks extremely weird. I do get idea of primary market with goods. That can be useful, even there secondary market might be reasonable. But once it goes beyond use by primaries maybe it should be banned. So you should hold or at least have clear plan to produce the goods you buy or sell. So at least one side of the trade would have to have real stake in the game. And everything should be delivered not just settled.
Having puts for stuff you do not have. Or buying calls from someone who does not have it just feels pure speculation thus gambling not hedging.
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