A group of House Democrats has called on the Federal Trade Commission to open an investigation into prediction markets, asking the agency whether it plans to take enforcement action against the platforms for potentially deceptive practices. In a letter to FTC Chair Lina Khan, the lawmakers requested details on any ongoing probes and what steps the commission might take to police the rapidly growing sector.
The request for an FTC probe
The Democrats specifically want to know if the FTC views prediction markets—platforms that let users bet on the outcome of elections, sporting events, or economic indicators—as vulnerable to manipulation or false advertising. The letter, which has not been made public in full, asks whether the commission considers the operators' marketing claims accurate and whether users are being misled about the risks involved.
Prediction markets have drawn increased scrutiny in recent years, particularly after the 2020 U.S. election, when some platforms allowed bets on the winner. Critics argue the markets can spread misinformation or be used to launder money. Supporters say they provide valuable data on crowd sentiment.
Deceptive practice concerns
The lawmakers point to a range of possible violations, including failure to disclose that odds are set by the platform itself, not by a transparent market. They also flag the risk of insider trading on political events—a gray area that falls outside traditional securities regulation. The FTC has authority under Section 5 of the FTC Act to go after unfair or deceptive acts, but it has rarely exercised that power in the context of betting on outcomes.
The letter asks for a timeline of any FTC reviews of prediction market operators, as well as copies of consumer complaints the agency has received. It also requests a briefing on whether the commission is coordinating with other regulators, such as the Commodity Futures Trading Commission, which oversees some event contracts.
Political pressure builds
The move follows similar pressure from Senate Democrats, who earlier this year urged the CFTC to tighten rules on election betting. The House letter signals that the issue is gaining bipartisan traction, though no Republican lawmakers have joined the call. The Democrats argue that without action, prediction markets could erode public trust in both elections and financial markets.
The FTC has not publicly responded to the letter. Agency staff typically review such requests and may decide to open a formal investigation, issue guidance, or decline to act. The lawmakers are likely to follow up if they do not receive a response within a few months.
For now, the fate of any FTC probe into prediction markets remains an open question. The agency is not known for aggressive enforcement in this area, but the mounting pressure from Capitol Hill could shift its priorities.
