Kalshi and Polymarket, two large financial firms looking to maximize their profits, have unleashed unregulated nationwide gambling by allowing bets on everything from sports and politics to the Golden Globe Awards and the return of Jesus Christ, all without the involvement of policymakers, elected officials, or consideration for the public interest. Given the long history of organized crime and financial predators in gaming, there is a strong public interest in properly regulating the industry. States have always done this to protect customers and keep criminals out, but neither of these two companies has followed any of the public interest standards. With over $2 billion being wagered on Kalshi each week and gambling growing daily thanks in large part to constant marketing by Kalshi, Polymarket, and numerous other gambling sites, appropriate regulation is more important than ever.
Kalshi and Polymarket run “prediction markets,” which are essentially gambling sites where users may wager money on whether an event will take place, such as which candidate will win an election or which sports team will win a game. Prediction markets are almost identical to casinos, street corner bookies, gambling apps, and other places where you may place bets. They refer to themselves as prediction markets in order to circumvent state regulation, which has been in place for decades to safeguard clients and prevent the involvement of organized crime and other financial predators in gaming.
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Kalshi and Polymarket, like most gambling sites, display the odds that an event will occur, which are determined by how much money other users bet on whether it will or not. Users can then predict whether the event will occur by betting “yes” or “no” based on the odds.
Kalshi and Polymarket argue that by informing the globe about what the “crowd” believes will happen, their websites give useful information that is more accurate than polls or forecasts. The difficulty is that, in the absence of inside information, people on these sites are as likely as anyone else to predict whether a candidate will win an election or a team will win a game.
The truth is that prediction markets are not actual markets. Real markets are appropriately regulated to guarantee that activity is legitimate, that the playing field is level, and that players follow through on their trades. This leads in actual trading and fair dealing amongst parties. Real markets have a regulator to prevent conflicts of interest and to act as a liaison between buyer and seller to assure the market’s proper functioning. None of this applies to the so-called prediction markets.
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