Prediction-market platforms are pushing to be governed only by federal swaps rules, displacing the state gambling laws that regulate casinos in Nevada and New Jersey, according to a Roosevelt Institute analysis published September 22. Kalshi, described in the analysis as the largest US prediction-market platform, contends its contracts are swaps used by sophisticated investors to hedge risk. Regulators in Kentucky, Nevada, and New York have challenged that framing directly.
The stakes go beyond jurisdiction. The analysis, written by Roosevelt’s Brad Lipton, argues the outcome determines what people can bet on, what they’re told about their odds, and whether any safeguards against addictive gambling apply at all.
Self-Certification Versus State Approval
Traditional gambling operators need permission before offering a new type of bet; Nevada’s gaming commission maintains a database of approved games, and New Jersey limits wagering to state-authorized contests. Prediction markets instead self-certify new contracts to federal regulators without prior approval, a distinction covered in ReadWrite’s earlier look at the CFTC’s proposed framework.
Contracts are theoretically barred if tied to terrorism, assassination, war, gaming, illegal activity, or matters easily manipulated, but the analysis says it’s unclear how strictly that’s enforced. It notes the CFTC does not appear to have challenged a single self-certified contract on Kalshi or Polymarket since volume on both platforms exploded. Age limits diverge too: Nevada and New Jersey cap traditional gambling at 21 and up, while prediction markets accept users starting at 18.
A Split Legal Record
The analysis describes a pitched legal battle, with the Trump administration suing states that try to enforce their own gambling statutes against prediction-market platforms. Courts have split on whether state law applies, but Lipton writes that most rulings have sided with states, pointing to recent wins for New York, Utah, and Nevada. That pattern lines up with broader state pushback tracked in ReadWrite’s coverage of state challenges in Missouri and Montana and coordinated opposition detailed in reporting on attorneys general fighting the CFTC’s proposed rule.
What Users Aren’t Told
Nevada requires casinos to post payoff schedules near tables and machines so players can calculate their odds; prediction-market users, by contrast, are told only what they’ll be paid if they win, with no disclosure of counterparties, trading frequency, or win-loss records. Roosevelt’s research has separately found ordinary users tend to lose to professional traders on these platforms.
Addiction protections show a similar gap. Nevada mandates problem-gambling materials and staff training funded by the industry; the analysis says prediction markets carry essentially no comparable mandatory safeguards, even as heavy advertising – including influencer content that doesn’t obviously read as advertising – draws in 18-year-olds who couldn’t legally gamble in a Las Vegas casino.
The Policy Question Ahead
Lipton argues state gambling rules, while imperfect, remain more protective than the minimal federal swaps regime platforms and the Trump administration are pursuing. His recommendation: apply state-style gambling rules to prediction markets while improving those rules, which would narrow the range of available bets and add disclosure and addiction safeguards.
That’s a policy proposal, not a legal outcome – the underlying jurisdictional fight between state regulators and federal swaps law remains unresolved in the courts.
The post Prediction Markets Leave Users With Fewer Gambling Safeguards appeared first on ReadWrite.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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