A group of nine Democratic members of the US House of Representatives is pressing the Federal Trade Commission (FTC) to investigate how online prediction market platforms advertise to customers compared to the way they describe their activities to regulators. The lawmakers allege that these platforms portray themselves as gambling operations to consumers, while claiming regulatory status as financial investment tools, potentially causing consumer confusion and evading gambling laws.
Prediction markets enable users to trade contracts based on the outcomes of future events. These platforms have recently come under congressional scrutiny amid concerns about insider trading, with probes launched into major companies like Polymarket and Kalshi. The Democratic lawmakers specifically raise concerns about the marketing language prediction markets employ, which draws heavily from sports gambling terminology, including references to legal betting and wagering on sports without an official sportsbook license.
The representatives emphasize that this conflicting messaging risks misleading users about the protections and regulations that apply. They call on the FTC to thoroughly examine these advertising strategies and ensure consumers receive transparent and accurate information about the risks involved. The letter also requests information from the FTC on whether it plans enforcement actions related to deceptive practices and if it has received any consumer complaints regarding prediction markets. Lawmakers have asked for a response by June 29.
Signatories include Representatives Kevin Mullin and Gabe Vasquez, who highlighted the need for regulatory clarity, as well as Jared Huffman, Raul Ruiz, Salud Carbajal, Mike Levin, Dina Titus, Paul Tonko, and Valerie Foushee. The group underlines the rapid growth of prediction markets as a blockchain-based application, noting increased transaction volumes this year driven by interest in political and geopolitical event contracts and favorable regulatory developments.