Better Markets urges regulators to let states and tribes regulate gambling

Better Markets has called on federal regulators to stop what it describes as prediction-market platforms’ evasion of state and tribal gambling safeguards, arguing that the industry markets wagering as investment to attract younger users.

The nonprofit issued a statement Wednesday in connection with its fact sheet, “Deceptive, Predatory Marketing Practices Show Why States Should Regulate Prediction Markets.” Andres Chovil, a policy analyst at Better Markets, said platforms were capitalising on “financial nihilism” by presenting bets as investments, despite the group’s assertion that most users lose money.

The group urged federal regulators to allow states and tribes to regulate gambling as they have for more than a century. Better Markets argues that calling wagers “trading” in event contracts, with support from the Commodity Futures Trading Commission, allows platforms to avoid state and tribal rules on advertising, responsible-gaming disclosures and helpline requirements.

Its central complaint concerns promotion. Better Markets said platforms use sponsored influencer material designed to create fear of missing out, and instruct influencers to call products “predictions on outcomes” rather than bets, picks or wagers. It named Kalshi as an example, alleging that such language can lead users to regard betting as a legitimate form of investing.

The fact sheet cited a U.S. Bank study in which 33% of Gen Z respondents and 29% of millennials said they would consider prediction markets as a way to build wealth. It also pointed to a Betterment survey, independently reported by CNBC, finding that 52% of Gen Z investors had redirected money intended for investing to sports betting.

The BBC, citing Morning Consult, reported that prediction-market users are disproportionately under 45 and that 71% are men. An AIBM-Ipsos poll found that slightly more than one-quarter of American men aged 18 to 24 had used a prediction-market or gambling app during the preceding six months, compared with 14% of the public overall.

Better Markets’ position conflicts with the CFTC’s assertion of federal authority. In an April lawsuit seeking to stop New York applying its gambling laws to CFTC-registered contract markets, the agency asked a federal court to declare that federal law gives it exclusive authority over event contracts and to bar enforcement of allegedly pre-empted state laws against registrants.

The commission has nonetheless acknowledged the sector’s rapid expansion. Its June proposal on public-interest determinations said CFTC-registered prediction markets recorded more than $25 billion in trading volume in 2025, and outlined how certain event contracts could be deemed contrary to the public interest and barred from listing or clearing. The proposal describes prediction markets as venues for trading event-contract derivatives, whose prices can convey probabilities and whose participants can hedge exposure to outcomes including economic, political, weather and sporting events.

Better Markets, founded after the 2008 financial crisis, has previously challenged event contracts on other grounds. A 2024 fact sheet argued that political contracts could encourage election-related disinformation, manipulation and speculation; its latest intervention shifts the emphasis to consumer marketing and the division of regulatory power between Washington, states and tribes.