Prediction Markets Are Learning From the Addiction Industry

If you believe the multibillion-dollar firms behind “prediction markets” and the individuals who are handsomely paid to promote them, two things are absolutely clear: These exchanges are not gambling, and they certainly don’t prey upon young or vulnerable people. But many lawmakers, as you might suspect, don’t seem convinced. Undeterred, the industry has been furiously adding to its roster of lobbyists and advocates over the past year, hoping to build on the Trump administration’s support, which is no doubt founded partially on Donald Trump Jr.’s positions at both Kalshi and Polymarket. But support from the administration and the first family does not seem to be enough, and the prediction market industry has been mobilizing an effort to ensure incipient attempts to rein in the industry die in the cradle. Key to these efforts are prediction market advocates who cut their teeth working on behalf of addictive industries in the past. Prediction markets are bracing for a drawn-out fight, and they’ve staffed their front group with executives well versed on issues of gambling and addictive products. The Coalition for Prediction Markets, or CPM—a trade group backed by some of the largest players in the prediction market industry, including Kalshi, Coinbase, Crypto.com, Robinhood, and Underdog—has recruited a bipartisan dynamic duo of influential former congressmen to be the faces of the industry. In addition to the political firepower, CPM added an influential former gambling industry advocate and a former vaping executive to help manage the organization’s direction. Prediction markets, which offer customers a chance to wager their money on uncertain outcomes in return for payouts from correct predictions, have claimed exemption from state and local gambling laws. They’ve managed to dodge regulations despite the fact that many of the predictions made on these platforms are on the outcome of sporting events, with one measure finding that up to 90 percent of trading volume on Kalshi, the industry’s largest domestic player, comes from sports. While this might sound like gambling to you or me, in the eyes of the industry, and of the Trump-controlled Commodities Future Trading Commission, or CFTC, the products offered by these firms are not gambling but swaps—sophisticated investment products that are regulated solely by the CFTC. State and local governments disagree. Forty-one state attorneys general have challenged this claim, with Minnesota going so far as to pass a law banning them, while Arizona’s attorney general filed criminal charges against Kalshi. Despite claims that prediction markets operate as investment tools, they are not sound investments for the average person. An analysis from The Wall Street Journal recently found that just 0.1 percent of accounts on Polymarket earn 67 percent of all profits on the platform, and that there are nearly three unprofitable accounts for every one that makes money on Kalshi. In one study, users of prediction markets were worse off, on average, than customers of traditional sports books. With lawmakers, regulators, and even the general public turning against the industry due to its avoidance of state laws, the industry banded together last December to launch CPM. The organization is headed by a onetime rising star of the Democratic Party, former Congressman Sean Patrick Maloney, who had advised Coinbase prior to his 2024 assumption of the ambassadorship to the Organization of Economic Co-operation and Development. At his side is former Republican Congressman Patrick McHenry. The onetime chair of the powerful House Financial Services Committee, McHenry has turned to advising financial firms since he left office in January 2025. At last count, McHenry held seven positions at financial firms, including four where he served as a “senior adviser,” counting CPM. Together, Maloney and McHenry are the bipartisan tag team tasked with protecting prediction markets from the dreaded threat of being regulated like gambling. In its campaign to achieve the joint goals of ensuring every American has access to a prediction market and blocking states from regulating them, CPM has shared a series of misleading facts about the nature of the predictions market industry. In one graphic, the organization touts that “nearly half of all adults under 45 have participated in an online financial or prediction market.” Key to this claim is the inclusion of other online financial markets, which could presumably encompass not only cryptocurrency exchanges but also run-of-the-mill investment accounts or even retirement accounts accessed via the internet.Other claims promoted by CPM seem even more dubious.