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
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.
Last time I checked the differentiator is whether skill is involved.
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.
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 is why Kalshi will win in the end. There's way too much money at play for this to turn into a slippery slope for Wall Street.