FTC Excludes Kalshi and Polymarket from Sports Gambling Probe

Investigation Focus

The FTC has announced that it will not investigate Kalshi and Polymarket, two rival prediction markets, for deceptive practices in the $167 million online sports gambling industry.

Background

Kalshi and Polymarket will reportedly be excluded from the FTC probe, which will instead set its sights on sportsbooks like DraftKings and FanDuel.

Regulatory Landscape

The firms will not be considered gambling and hope to be regulated federally under the Commodity Futures Trading Commission.

Industry Context

Prediction markets say they aren’t offering gambling, and hope to be regulated federally under the Commodity Futures Trading Commission instead of individual states.

Company Responses

Kalshi CEO Tarek Mansour recently argued that prediction markets aren’t gambling because it is an open financial market that matches buyers and sellers.

Industry Impact

The exclusion of Kalshi and Polymarket from the FTC probe raises questions about the distinction between prediction markets and sports betting.

Regulatory Implications

The state of New York has already sued Kalshi and Polymarket, accusing them both of running an illegal gambling operation that’s encouraging problem gambling among people under the age of 21.

Market Impact

The firms will likely continue to operate under the oversight of the Republican House Oversight Committee member James Comer.

Future Outlook

Kalshi and Polymarket will likely continue to advocate for federal regulation under the Commodity Futures Trading Commission.