The Federal Trade Commission's investigation into deceptive practices in the online sports gambling industry will exclude the prediction markets Kalshi and Polymarket, focusing instead on established sportsbooks like DraftKings and FanDuel.
The FTC probe, which remains in early stages, is expected to examine misleading advertising and examine the rate of suicides, hospitalizations, and bankruptcies attributed to the industry.
Ongoing Legal Challenges
While Kalshi and Polymarket avoid the FTC investigation, both platforms face separate legal pressures. The two firms are already under scrutiny in an insider trading probe overseen by Republican House Oversight Committee member James Comer.
Additionally, New York has sued both Kalshi and Polymarket this year, alleging they operate illegal gambling operations and encourage problem gambling among people under 21. Last month's Polymarket suit cited research from the National Institutes of Health and American Psychological Association linking pathological gambling to mental health disorders, suicidal behaviors, and substance abuse.
Dispute Over Classification
Both Kalshi and Polymarket reject the gambling label, arguing they operate as financial markets. Kalshi's CEO contended that prediction markets differ fundamentally from gambling because they match buyers and sellers rather than profiting when customers lose. Polymarket's CEO previously characterized major sportsbooks as a "duopoly" and argued that prediction markets offering derivatives should face different regulatory treatment than gambling platforms.
The platforms seek federal regulation under the Commodity Futures Trading Commission rather than state-by-state oversight.
