Nine House Democrats have asked the Federal Trade Commission to open an investigation into prediction platforms Kalshi and Polymarket, accusing the companies of deceptive practices and dodging financial regulations. The letter, sent this week, raises questions about how these markets operate—and whether consumers are getting a raw deal.
The Allegations
The lawmakers, all Democrats from the House, argue that Kalshi and Polymarket let users bet on events like election outcomes and economic data without the oversight that governs traditional financial products. They claim the platforms' marketing and operations mislead customers about the risks involved. The letter specifically points to what it calls “regulatory evasion,” suggesting the firms structured themselves to avoid securities or commodity laws.
The group didn't name individual instances of wrongdoing but said the pattern of behavior warrants a full FTC probe. They want the agency to determine if these markets violate federal rules against unfair or deceptive acts.
Kalshi and Polymarket
Kalshi, a registered derivatives exchange, focuses on event contracts tied to economic indicators and climate data. Polymarket, built on blockchain technology, allows users to trade on the outcome of elections, sports, and pop culture events using cryptocurrency. Both have grown quickly, drawing millions in trading volume.
Critics have long warned that prediction markets operate in a gray zone. The companies have maintained they comply with relevant laws, but the Democratic lawmakers see it differently. The letter argues that the platforms' design exploits legal loopholes and could expose retail traders to harm.
What the FTC Could Do
The FTC has broad authority to police deceptive practices. If it takes up the case, it could demand internal documents, interview executives, and ultimately impose fines or force changes to how Kalshi and Polymarket do business. The agency can also refer findings to other regulators if it spots securities law violations.
The commission hasn't said whether it will act. It typically doesn't comment on pending requests from Congress. But the letter adds pressure on an agency that's already facing questions about its oversight of digital markets.
For now, the ball sits with the FTC. The companies haven't publicly responded to the lawmakers' request. Whether the agency opens a formal inquiry could shape the future of online event betting—and how far platforms can push before regulators push back.
