The rapid rise of prediction markets is creating new concern among public health advocates who warn that gambling support systems in the United States are not keeping up with the spread of online betting-style platforms.
Prediction markets allow users to put money on the outcome of real-world events, from elections and sports to entertainment awards and economic data. Supporters describe the platforms as information markets that help forecast public expectations. Critics say many of the products look and feel like gambling, especially when they involve sports, politics or fast-moving cultural events.
Companies such as Kalshi and Polymarket have grown quickly by arguing that they offer event contracts or derivatives rather than traditional gambling. That distinction matters because gambling is usually regulated state by state, while derivatives markets fall under federal oversight by the Commodity Futures Trading Commission.
The CFTC has defended its authority over prediction markets, arguing that a federal framework prevents a confusing patchwork of state rules. Several states, however, have challenged that position, saying the platforms should be treated like gambling operators when users are effectively wagering on uncertain outcomes.
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The legal fight is now unfolding as prediction markets become more visible in American culture. Platforms have advertised around major sports events, and their branding has appeared alongside high-profile entertainment and political spectacles. That visibility has made advocates worry that risky betting behavior is becoming normalized faster than treatment resources can expand.
Public health experts say the issue is not only whether prediction markets meet the legal definition of gambling. The bigger concern is whether users can develop the same unhealthy patterns seen with sports betting, online casinos or speculative trading. Any product that combines money, uncertainty, speed and emotional engagement can become harmful for some people.
The National Council on Problem Gambling has called on prediction market operators to promote the national problem gambling helpline and adopt stronger consumer safeguards. Advocates argue that if platforms are going to operate nationwide, they should also help fund prevention, education and treatment.
The problem is especially serious in states where gambling remains illegal or tightly restricted. In those places, public funding for gambling addiction services may be limited or nonexistent because lawmakers never built a treatment system around legal betting. But online platforms can still reach residents, creating a gap between access to risky products and access to help.
Utah is one example often cited by advocates. The state has some of the strongest anti-gambling laws in the country, yet residents can still encounter prediction market platforms online. Without dedicated state gambling-treatment resources, people who develop problems may have few local options beyond national helplines, peer-support groups or private therapy.
The growth of sports betting since the Supreme Court opened the door to legalization in 2018 has already put pressure on addiction services. Prediction markets add another layer by blurring the line between investing, entertainment and gambling. Some users may see them as smarter or more analytical than betting apps, even though they can still lose money quickly.
Industry supporters argue that prediction markets are different from casinos because prices can reflect real information and users can hedge risks. They also say federal regulation is more appropriate for markets that resemble financial contracts. But critics counter that many users are not hedging anything. They are betting on outcomes for entertainment, profit or excitement.
The debate is now becoming both a regulatory fight and a public health question. If prediction markets continue expanding, lawmakers may face pressure to create a national funding stream for gambling addiction prevention and treatment. The proposed Points Act, backed by problem gambling advocates, would create federal support for those services.
For now, the market is moving faster than the safety net. That has advocates warning that the country may be repeating the same mistake made with sports betting: legalizing or normalizing new gambling-like products before building enough support for people harmed by them.
Why It Matters
Prediction markets matter because they are expanding access to money-based wagering on everyday events while many states lack strong gambling addiction resources. The debate is no longer only about regulation. It is also about whether public health systems are prepared for the risks that come with nationwide digital betting.
What Comes Next
Courts and regulators will continue deciding whether prediction markets fall primarily under federal derivatives law or state gambling rules. At the same time, advocates are likely to push for stronger warnings, helpline promotion, age controls and dedicated funding for gambling addiction treatment.
A policy discussion highlighted the debate over whether prediction markets serve an economic purpose or move closer to entertainment-style wagering.
“The commodity markets are not for entertainment.” Former CFTC Commissioner and SEC General Counsel Dan Berkovitz joins @RebeccaRettig1 and @renato_mariotti on this week’s The Policy Protocol to break down the ‘economic purpose’ test for prediction markets and the CME–CFTC fight… pic.twitter.com/6ybbXfFJWT
— CoinDesk (@CoinDesk) June 20, 2026
