Better Markets Says Prediction Markets Are Gambling by a Different Name

• Organization is a frequent critic of prediction markets
• Says the industry is offering by gambling by another name
• Better Markets believes the CFTC doesn’t have the competencies or technology to regulate gaming across the country

Better Markets, a nonpartisan public policy group, says prediction markets are in fact offering betting services and are using the term “event contracts” to disguise that fact.

The organization, which has rapidly become a frequent and vocal critic of the industry, believes big-name prediction market operators leverage the event contract vernacular to skirt state gaming laws, adding those firms offer services that are remarkably similar to those purveyed by casinos and sportsbooks.

These activities are no different in substance than gambling at a casino, sportsbook or corner bookie, which is why ‘prediction market’ users can bet on everything from elections and sporting events to the Golden Globes and the return of Jesus Christ,” says Better Markets.

The organization isn’t shy about lobbing criticism at the industry. In a January report, Better markets said prediction markets “gamify” finance by blurring the lines between betting and investing, potentially duping inexperienced, young retail investors in the process.

Better Markets Calls Out CFTC, Too

The Commodities Futures Trading Commission (CFTC), which is prediction markets’ federal regulator, didn’t escape criticism from Better Markets as the policy groups overtly questioned the commission’s ability to effectively regulate a new form of wagering that for now is available all over the country.

“The CFTC is a federal financial regulatory agency with no experience, expertise, personnel, technology or budget to police gambling in all 50 states covering an unlimited number of topics, and trying to do so will distract the CFTC from its critical mission of policing the multi-trillion derivatives and commodities markets,” adds the group. “All Americans depend on the CFTC to make sure that everyday essentials from cereal at breakfast and bread for lunch sandwiches to gas for the car and oil to heat a home, are available at the right time, in the right quantities, and fairly priced based on supply and demand.”

The Commodities Exchange Act (CEA), which is frequently mentioned by prediction market operator, grants the CFTC authority to regulate futures, options, and swaps with the caveat that those derivatives have genuine financial utility. Critics and state regulators argue that event contracts pertaining to sports, among others, aren’t useful financial instruments.

Prediction Markets ‘Unleashed Unregulated Gambling’

One of the most frequent criticisms aimed at prediction market operators is that these companies are skirting state gaming laws because they don’t possess state gaming permits. Better Markets subscribes to that notion and goes further, noting that yes/no exchanges prey on the young.

“These companies have unleashed unregulated nationwide gambling without the involvement or review by any elected official, regulator, or policymaker, even though there is a very significant public interest in properly regulating gambling to keep criminals out, prevent minors from engaging in gambling, prohibit the use of nefarious gamification and AI deepfakes, deal with addiction and other social consequences like alcoholism, drug abuse, bankruptcy, spouse and child abuse and other anti-social activities often associated with gambling,” said the policy group.