Prediction markets like Kalshi, Polymarket and others "closely resemble" sports betting platforms, according to U.S. Rep. Shomari Figures (D-Montgomery).
Prediction markets allow customers to buy and sell contracts on sports events similar to more traditional sports betting platforms. Although prediction market companies have been sued in courts across the country in various states, the federal government has maintained they are not subject to state gambling laws and are legal in all 50 states.
Prediction market apps are available to download in Alabama despite the state's strict anti-gambling laws.
Figures said at a House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development meeting on Tuesday that there are "legitimate concerns" about prediction markets.
"We need a well-regulated commodities market to manage risk and for investors and producers to be able to plan for the future," Figures said. "As Congress, we have to sit here and acknowledge both the potential benefits and potential harms created in the products that they regulate, including in prediction markets. We have to ask ourselves: individuals who can not legally purchase alcohol may still be able to participate in financial products that closely resemble, I think we can all agree to at least that basic understanding, even if we can acknowledge differences, there are certainly some very strong resemblances between sports betting and prediction markets on sports events. That obviously can result in significant losses. We must also consider the broader ethical questions surrounding markets tied to injuries, natural disasters or geopolitical events, some of which have been in the news here lately."
"The products raise legitimate concerns about incentives, manipulation, and whether financial interests could encourage harmful behavior. As these markets continue to evolve, Congress has a responsibility to ensure that CFTC has the resources, staffing, and authorities necessary to protect consumers while also preserving the integrity of markets," he added.
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