A House Agriculture Subcommittee held a hearing on prediction markets (e.g., Kalshi, Polymarket, etc.) Tuesday morning on Capitol Hill. The main takeaway was clear: these apps will keep financially harming many users through sports “contracts” unless the judicial branch of government stops them.
In other words, Congress is a wet noodle, apparently impotent at this moment in time to address America’s gambling addiction crisis, which extends far beyond prediction markets.
The hearing followed a similar one in a Senate Commerce Subcommittee back in May.
Federal and state courts have been ruling against prediction markets, but it’s a slow patchwork of mixed rulings. At the hearing, prediction market opponents, including the brick-and-mortar casino industry, said Congress needs to intervene on prediction market sports betting products.
Dusty Johnson (R-SD), chair of the House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development, seemed to agree that America’s elected officials have a role.
“Courts are acting in this space. The commission [CFTC] is acting in this space,” he said. “I do not think that this committee, Congress, should be silent. We have an obligation to drive toward finding out what the common ground is. … It may be that the courts and the commission alone can provide that needed clarity, and yet if we don’t ask if there is a role for Congress, we are not doing our job.”
The main example of the convoluted legal fight over prediction markets was Michigan. The CFTC recently directed Kalshi to defy a Michigan state court order restricting the platform within the state, an unprecedented move.
Despite the legal anarchy around U.S. peer-to-peer online betting, Congress is practically hand-cuffed right now to do anything about protecting users from these products. That is the core problem, as the prediction market industry has shrewdly courted policymakers on both sides of the aisle.
The hearing, which you can watch below, was interesting from a legal and policy perspective, but tedious and disheartening from a public health perspective.
If you’re someone who has been harmed by a gambling addiction to a prediction market, whether directly or through someone else, you’re just going to have to wait, and wait some more, for Congress to act.
The leading firms in the prediction market sector count Donald Trump Jr. as an investor, so that’s most of what you need to know to understand why the executive branch has enabled the status quo. But it’s worth stressing that some Democrats have also supported the nascent prediction market sector.
Gambling predation in the U.S. is a bipartisan effort. But fortunately, so is resistance to it.
