US House Democrats Call for FTC Probe Into Prediction Markets

Prediction markets let users trade event contracts tied to outcomes in sports, politics, culture and weather. The industry has expanded rapidly in New York City, while escaping some marketing restrictions and consumer safeguards that apply to casinos and online sports betting. That regulatory gap has sharpened concerns that platforms may present wagering as investing, target minors or young adults, and expose people prone to compulsive gambling to potentially addictive products.

New York City Council Speaker Julie Menin announced the investigation on Aug. 12, 2026, sending letters to Kalshi, Polymarket, Coinbase and Gemini Titan seeking details about advertising reaching New Yorkers. The Council plans a hearing and will examine allegations involving undisclosed influencer promotions, fictitious trades and videos portraying losing wagers as profitable. Council Member Harvey Epstein said prediction-market volume could reach $300 billion this year. The inquiry may lead to new legislation, enforcement, public education, health measures or funding for consumer protection.

Prediction markets let traders take positions on outcomes ranging from sports contests to elections. Their rapid expansion has put the Commodity Futures Trading Commission at the center of a jurisdictional fight over whether event contracts are federally regulated derivatives or gambling subject to state oversight. For CFTC-regulated designated contract markets, self-certification can speed listings, but exchanges must still show that each product complies with the Commodity Exchange Act, settlement rules and core principles.

The CFTC’s Division of Market Oversight issued its latest advisory on July 24, warning platforms including Kalshi, Coinbase, Polymarket and Crypto.com against broad, template-style filings that combine many contract permutations. Each proposed variation must include its terms, underlying commodity, settlement methodology, data sources and compliance analysis under Regulation 40.2, the agency said. The notice was the regulator’s second warning in several months, following guidance on March 12, though closely related contracts may still be certified as a class.

Polymarket is a prediction market where event contracts allow users to trade on outcomes including elections and sporting events. On January 3, 2022, the CFTC found that it was operating an unregistered trading platform, imposed a $1.4 million penalty and ordered it to exit the United States. As the platform returns to the U.S. market, questions over whether its marketing misled consumers are also affecting the division of gambling oversight among federal, state and tribal governments.

Republican Senator John Curtis and Democratic Senator Adam Schiff wrote to CFTC Chairman Michael Selig on June 25, requesting by July 10 an explanation of whether the agency was investigating. A June 20 report reviewed more than 1,100 videos from 10 creators and found that about 70% showed simulated trades, presenting nearly $1.9 million in fictitious profits. Polymarket has begun auditing the content.

U.S. prediction market platform Kalshi allows users to trade contracts on political, economic and public-event outcomes, but its business has long faced jurisdictional disputes between state gambling laws and federal commodities regulation. The new organization, Americans for Fair Markets, seeks to break the traditional gambling industry's policy advantage, with the outcome shaping whether prediction markets can legally expand across the United States.

Kalshi recently announced its support for Americans for Fair Markets, which was co-founded with the involvement of a former Trump administration official. The group will work with an industry coalition backed by Coinbase and Crypto.com as the U.S. government scrutinizes the regulation of prediction market platforms. Available information does not disclose the organization's exact founding date, the amount committed or the official's name.

Legal sports betting expanded rapidly after the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018. The market is now worth about $165 billion and spans 39 states and Washington, D.C. Kalshi, Crypto.com and others have entered the sector with event contracts regulated by the Commodity Futures Trading Commission, creating jurisdictional conflicts with state gambling laws and tribal gaming interests.

The U.S. Senate Commerce Committee's consumer protection panel held a roughly two-hour hearing on May 20, 2026, focusing on advertising, addiction and the risk of game manipulation. Chairman Ted Cruz cited NBA and MLB manipulation cases and said the Supreme Court might have to decide the issue. Kalshi had previously pledged $2 million to the National Council on Problem Gambling, while testimony indicated that nearly 50% of its trading during the 2025–26 season came from sports contracts.