The War Over Prediction Markets Is Just Getting Started

Wired

by Kate Knibbs

February 20, 2026

AI-Generated Deep Dive Summary

The U.S. political landscape is increasingly divided over the legality and regulation of prediction markets, with companies like Kalshi and Polymarket at the center of the conflict. While some argue that these platforms operate as unregulated gambling operations, others claim they provide legitimate access to financial markets. The debate has drawn unexpected alliances, with conservative and liberal factions aligning in unusual ways. Prediction markets, which allow users to trade shares tied to event outcomes—ranging from sports to politics—have grown into billion-dollar industries, attracting both casual speculators and seasoned traders. However, this rapid growth has sparked concerns among regulators, lawmakers, and consumer advocates. At the heart of the issue is whether prediction markets should be treated as gambling or financial tools. Proponents argue that platforms like Kalshi democratize access to commodities trading by allowing users to trade directly with one another, offering fair pricing and the ability to cash out at market value. They emphasize that unlike traditional casinos, there’s no "house" taking a cut, which they claim benefits users. Critics, however, including former New Jersey Attorney General Matt Platkin, argue that these markets are unregulated, untaxed, and potentially exploitative, resembling illegal gambling operations. The legal battle over prediction markets has heated up at both the federal and state levels. The Commodity Futures Trading Commission (CFTC) oversees these platforms as derivatives markets, but states like Massachusetts have taken action to limit their operations, with Kalshi narrowly avoiding a shutdown. Meanwhile, 23 Democratic Senators recently expressed support for aligning prediction markets with state gambling laws, highlighting the growing political momentum against unregulated markets. This pushback is partly driven by states’ economic interests in maintaining their regulated gaming industries, which contribute significantly to local tax revenues. The debate over prediction markets is a microcos

Verticals

techscience

Originally published on Wired on 2/20/2026