Yeah I agree with the profound harms; it's just that they need to be weighed against the benefits that come from these markets. The ability to predict, hedge, etc. Of course sports contracts are a pure social loss. But when regulators get in the business of deciding what is a worthwhile contract, there is a risk of throwing the baby out with the bathwater. So "I'm not sure" doesn't mean I'm against, it means I am kind of torn between these two things.

Not surprising when the only realistic path to wealth is some form of gambling.

I mean, yes that is a moral crusade. That doesn't mean moral crusades are bad.

> Congress should probably just pass a law delegating regulation of "sports futures" to the states to remove any legal ambiguity.

Or they could do the opposite, and just say that apps like this are gambling, which they are, and not a "futures market" that has any real value to society.

Nobody is forcing you to gamble. If you think it's a "net bad" then simply don't do it, it doesn't need to be illegal for consenting adults to make transactions with eachother.

Agreed, and you must first file charges to make it there.

EDIT: Looks like the 9th and 6th circuits have since agreed and rejected Kalshi and CFTC's argument.

You have it exactly backwards. There is a growing consensus among the courts that the states have the right to enforce this, and have since the CFTC was created.

It will go to SCOTUS due to the circuit court split.

> lost before it could even go to trial

Source?

I'm seeing "U.S. District Judge Michael Liburdi in Arizona, a Trump appointee, denied Kalshi's request for a temporary block on Tuesday and ordered the company to demonstrate why the case should be in federal court given the new state charges" [1]. That's quashing a request for a preliminary injunction. Not throwing out the case.

Meanwhile, "federal and state judges in Nevada and Massachusetts, respectively, issued early rulings in favor of states looking to ban Kalshi and its competitor Polymarket from offering sports betting in their states, while federal judges in New Jersey and Tennessee have ruled in favor of Kalshi. The Nevada lawsuit was remanded to state court."

[1] https://www.wlky.com/article/arizona-kalshi-criminal-charges...

Counter point: the 10th amendment is also strong. Is it finance? Strongly a Federal issue. Gambling? Strongly a State issue.

> Federal preemption is well established

In what? Source?

CFTC seems to be preëmpting state gambling laws under commodities regulation (specifically, as "excluded commodities"). That sounds, to me, like a major question. The sort Chevron deferred to regulators. The kind our current SCOTUS says should be decided by the Congress. To my knowledge, the Congress has said nothing about prediction markets. Which means it's in the domain of states.

Otherwise, fuck it, let's launch a prediction-market based national health insurance market. I'll sell you a contract that pays my medical bills if I have a health event.

Are you familiar with these cases at all? Gambling regulation is left basically entirely to the states.

And easily overturned, like Roe v Wade

Oh yeah? Please tell us which federal statute preempts Utah's gambling laws.

They're hard to find now, but this guy shows one. https://www.tiktok.com/@trickyguysports/video/73567912460415...

Oh, didn't even know Kalshi enforced KYC, but they do. Every time I heard about these two, it was people using basic paid VPNs to access the non-US versions and deposit cryptocurrency without KYC. When everyone was talking about the 2024 presidential election bets, they didn't have a US version at all. But at that point it's about federal law, not state.

The other law was about porn that I guess wasn't always paid for, so yeah.

The challenge with regulating cannabis advertising is that dispensaries have turned their storefronts into highly effective advertisements. Few storefronts in NYC are more eye-catching.

It's hard to regulate advertising when the store itself is the ad.

Last time I visited the US, I had never seen as immense an advertising banner as the one on the side of the building in LA advertising cannabis.

this is an answerable question and these markets are generally well calibrated (including on election outcomes), they have a good brier score.

i would not premise an anti-prediction market argument on their accuracy being bad, you are building on shaky foundations. the better argument is the paternalist protecting stupid people from themselves imo.

> They're pure corruption engines designed for insider betting. The top brass of these companies need to be made example of.

is there any surprise then that Trumps are on the boards of both?

I've seen those and they are crazy! Many elections are decided by the primary anyway, and then of course exit polls are going to be basically accurate 2 hours before the election. It's not even that fine print, I think they may actually just be stupid.

They absolutely have been the main force behind the timing of this push. It was the main topic of General Conference a few weeks ago and one of the most eyebrow-raising articulations of official church policy.

Given the way that the church has explicitly encouraged state legislators to shoot down recent laws it's not surprising to think they'd be pushing for this.

I thought it worth posting the stance for those not willing to click

... Gambling is motivated by a desire to get something for nothing. This desire is spiritually destructive. It leads participants away from the Savior’s teachings of love and service and toward the selfishness of the adversary. It undermines the virtues of work and thrift and the desire to give honest effort in all we do.

Those who participate in gambling soon discover the deception in the idea that they can give little or nothing and receive something of value in return. They find that they give up large amounts of money, their own honor, and the respect of family members and friends. Deceived and addicted, they often gamble with funds they should use for other purposes, such as meeting the basic needs of their families. Gamblers sometimes become so enslaved and so desperate to pay gambling debts that they turn to stealing, giving up their own good name.

Also "Utah is one of only two states where gambling is also prohibited under the state constitution"

Ehh I wouldn't try to appeal too much to what the LDS church thinks about this. They require members to give 10% of their annual income to the church, while already having close to $300 billion in the bank.

Everyone knows the state of Utah is largely run by the church.

If the differentiating factor is just who you’re betting against, how are Kalshi et al any different from online poker? It’s still gambling, the house just takes a rake

If Kalshi is not a gambling operation then it is an unregulated futures market, which is still illegal. There are perverse incentives in futures markets too, which is why they are regulated.

Also speculators serve an important purpose: hedging strategies require speculators on the other side. It is not just a "certain clientele," there are people who run profitable businesses on speculation (it amounts to collecting insurance premiums from people who want hedges).

Robinhood is regulated under the SEC and other regulatory bodies and keeps "paper trails" of the trades.

Besides the brokerage being regulated, stock markets are regulated.

It's really the worst of both combined. There is ample gambling like options and behavior on Kalshi

&&

policy makers, assistants, journalists, and the like are insider trading - and the president of the united states is intentionally market manipulating for profit

90% of trade volume on Kalshi is sports betting

51% or more of social media is automated.

Bots Rule Everything Around Me BREAM dollar dollar bill yall.

like, of course the gambling halls drop big money on online marketing

I liked it for political races as an alternative to polls. Was terrible for several other things. 99% of it was really just sports betting, which I can't see being a good thing.

What in the revisionist history? Polymarket has been getting shit on here since it debuted.

you must be from an alternate timeline

That was true at one point in time but right now the stock market is quite similar to Polymarket. The bond market is the one that would have been a better example.

That's not really true. It's very easy to start trading options and lose all of your money overnight. There would be no recourse

This POTUS in particular can do whatever he wants.

If I were Iran I would regularly put up 10 million or more on bets that the US wont attack Iran the next day and if somebody takes up the bet you know you are on.

If you are referring to Polymarket, it's an advisory board, not a board of directors. Big difference.

If the goal is to profit off of bombing other countries, why do you need Kalshi?

If you have advance knowledge of an attack, there are much less conspicuous ways to profit off that.

These venues do not have enough liquidity to attract Trump and his cronies. There might be people lower down the food chain who are taking advantage though.

"What they are doing is quite obviously legal right now. Federal law trumps state law and the feds have an opinion..."

Federal law does not categorically trump state law.

https://en.wikipedia.org/wiki/Federal_preemption

Whether pre-emption applies in this case depends on whether the courts accept Kalshi/Polymarket's claim that they operate a futures trading platform, not a gambling platform. If and only if that claim is accepted is there a pre-emption argument, and only then would the opinion of the Commodity Futures Trading Commission be relevant.

> What they are doing is quite obviously legal right now. Federal law trumps state law…

No. There's no "states must permit gambling" Federal law for state bans to conflict with currently; states are free to ban it.

https://en.wikipedia.org/wiki/Gambling_in_the_United_States

"While gambling is legal under U.S. federal law, there are significant restrictions pertaining to interstate and online gambling, as each state is free to regulate or prohibit the practice within its borders."

Isn't it way more complicated than that? A state can obviously make things illegal in that state that aren't illegal nationally, they do it all the time. There would have to be a positively conflicting law to be a debate. (like with drug laws) Normally going in the other direction. Pretty sure you'd need a constitutional amendment to bind a state from doing something. Like in the case of drugs where federal law is often more strict, there's a whole body of case law around that. They made a commerce clause argument, and there's a doctrine they can't force the states to act to enforce a federal law, but also the states can't countermand the federal law, there's a whole history of courts dealing with the interactions.

I agree, this needs to be decided by the court. But it's not really an issue of a state law trying to supersede a federal law. It's a state law superceding the authority a _regulator_ believes it has.

Kalshi has a serious uphill battle here. As the Judge said in granting Utah's motion and delying Kalshi's motion for a preliminary injunction:

> Shelby determined the text of US law makes it clear that state regulation is not forbidden. US law states that CFTC jurisdiction does not “supersede or limit the jurisdiction conferred on courts of the United States or any State,” and “explicitly provides for State regulation of its gaming laws in all but a few specified cases,” he wrote.

> “Congress is aware that some States permit gambling while others do not, and the CEA explicitly provides for State jurisdiction,” Shelby wrote.

I'm not saying I'm right here, but I am saying it seems facially ridiculous to consider "an opinion on who will win the super bowl" as a commodity future. Like, nobody is getting a superbowl win delivered to their house after the future contract executes.

all of this stuff is very obviously sports betting. Kalshi can say the piss on our pantlegs is rain, but I don't feel very obligated to belive it. I recognize the legal argument, I personally think it's bunk, I think it's reasonable for a legislator to say it's bunk, and it is hardly settled to say that Utah can't do this.

In fact, we rewound to, say like 2010, this would be completely obvious that Utah is correct.

"Facing felony charges" doesn't tell me much, and the current state of the world tells me those charges will be dismissed as soon as some money moves around.

Arizona already tried charging kalshi criminally and lost. This will go nowhere

If it is not gambling then it amounts to an unregulated futures market, which is also illegal. There is no way around this for Kalshi/Polymarket, they have broken the law and the only question is which law was broken.

Why is betting on risky 0DTE stock options legal in Utah but sports not legal?

Why are casinos operated by Native Americans legal but casinos operated by black people illegal?

I don't think "illegal gambling" is illegal for the reasons you want it to be illegal.

The reason we have judges is that a thing that's 80% sports betting and 20% prediction market is still an online casino.

This would be a great post for Kalshi's lawyers to make. Hard to believe it though. To be clear it is a not a fundamental proposition of the legal system that every illegal activity be tested before it "actually" becomes illegal. It is a business' obligation to not violate the law, not the other way around.

I think I understand the basics of business and business law in the US. It is disgusting how easy it is to hide behind a corporation or LLC to avoid criminal charges and civil liability.

Slippery slope argument. You can have authoritarian, anti-people legislation, and you can have pro-people, anti-corporation legislation. These are very different, and any legislator or ideologue that tells you any different has listened to too many Maggie Thatcher and Ronald Reagan speeches.

Sympathetic but that's not relevant. GP is not talking about what kinds of things corporations should be held accountable for, but whether their officers should be held accountable. At the heart of this is whether the punishments for corporations are sufficient if they don't actually deter illegal behavior.

This is the old, "Easier to ask for forgiveness than to ask for permission"

A lot of these companies have taken this approach. Break laws until someone finally notices AND does something about it. The runway to a slap on the wrist is often times more financially beneficial to companies - there is no incentive to stop if you run a billion dollar company and breaking the law gets you a $50M dollar fine you make back in a single month.

I thought SOX (Sarbanes–Oxley Act) was supposed to prevent a lot of this, but I guess companies just continue to find loopholes to exploit.

I think sometimes people need a visceral demonstration of what bad laws are actually preventing. Uber was a pareto improvement in my view: we are in a better world both for consumers & for low-income wages having ridesharing as a backstop.

On the other hand, I've come around to the view that sports betting is a net unqualified bad -- and I didn't necessarily feel that way before the Kalshi/PM explosion.

Uber and AirBnB were things we should have taken far more seriously.

That being said, they weren't effectively offering unregulated gambling on any difference of opinion. Gambling is a vice. We've made it a regulated vice, but it's very much still a vice. If you get rid of the "regulated" part, people, including those with the ability to present a case in front of a grand jury, are going to see you as a 1980s cosa nostra capo and act accordingly.

Eh. Uber and Lyft exploit people bad at math. Just as gambling operations do.

So your two examples of this supposed bad thing are two completely unambiguous goods for the world?

What behavior from Airbnb do you think compares in criminality to running an online bookie?

> An event predicted to happen p% of the time happens about p% of the time. Can’t beat that.

https://marginalrevolution.com/marginalrevolution/2026/10/pr...

From my understanding Kalshi is federally regulated by the CFTC.

Yes, and there are many such cases.

Like a resort hedging their income against bad weather.

Or a sports bar hedging their city's team getting knocked out of a tournament early.

It can be used to gamble, but it's disingenuous to say there are not legitimate use cases that aren't gambling.

Do they?

If the federal government says it's not gambling, then does a state get to say it is?

States can't just override federal law with their own laws.

It is the same argument that a "sovereign citizen". The "I do not recognize your law" kind of stupidity. The only reason they have not been long in prison is corruption at the highest level at the White House.

> prion time

In addition to being utterly terrifying, this would fall afoul of the "cruel and unusual punishments" thing /s

(What a typo)

It is a naive take, and the take that has been most propagandized by these companies.

The only one I can think of is, having a better idea of which way the presidential election goes might've been useful for some people, or some other large election. There's a lot of egg on the faces of all these mainstream media polls, which still continues to trigger some people.

Most uncertain things that people need to hedge (currency, commodity prices) already had a hedge.

That's way too narrow of the categories. Here are some more cases, and you tell me where can I hedge it? And don't tell me the answer is "go to Goldman Sachs and they create any kind of derivatives to hedge for you", that only works if you are a huge enterprise. I'm talking about SME, or even one person company with $1-5M ARR.

(By the way, I do trade on Polymarket / Kalshi, had a job interview with Kalshi many years ago but did not take their offer since I disagreed a lot with their product design. So all of this is my own opinion).

1. Suppose I run an ice cream shop in midtown Manhattan, and my foot traffic depends on how good the weather is. If it's sunny and dry, I expect a lot of traffic, vice versa, if it's thunderstorm, hurricane or snow, I would run the day without any revenue (and a lot of ice cream waste). What is the way for me to hedge weather risk that could seriously affect my business?

2. Suppose I'm a restaurant owner in Koreatown in LA, and during World Cup I run a restaurant expecting a lot of Korean coming to my area (and my restaurant). So I would ramp up my business, hiring a lot of staffs, sourcing a lot of ingredients from the vendors. Then the biggest risk (and anticipation) is that Korea would be knocked out very early, which unfortunately that precisely happened. So the foot traffic evaporated, and with that the revenue. How could I hedge that risk?

3. Suppose I'm a distributor / reseller who needs to import goods and products from other countries and resells it back to US for profit. Barring the import / export regulations, the biggest risk is tariffs: the orange man can (and did) impose 50% tariffs from China, and all the sudden I face a severe supply-demand imbalance with a lot of contract cancellation and such. How can I hedge such tariff risk from the orange man? (Obviously, the alternative is that I wish we could have elected a more competent leader, but at least 75 million American disagreed with me).

> Most uncertain things that people need to hedge (currency, commodity prices) already had a hedge

What happens when the people with pitch forks come for your derivatives and call it gambling? They did during the 2008 financial crisis. It sounded pretty much exactly like your take here, one abstraction jump away.

Then after they've come for your derivatives, they come for your banks. Because what is a bank except skimming off the top of the company doing the real business?

Then they come for your company. Because what is a companies except skimming off the top of the workers doing the real business?

And then you're standing in that bread queue wondering how it happened, even if it was all 100% predictable.

It's the least inaccurate way. There's money to be made if you're sure you have a better way. The real problem is we're already seeing these markets influence the outcome.

do you know of a better source of predictions, and if so, why are you not using that knowledge to make a killing on the prediction markets?

markets on people dying are not allowed for this exact reason

Probably referring to online gambling specifically. And I would frame it as the folks who promote pyramid schemes are the same as those who promote online gambling.

Prediction markets' business model is taking transaction fees from contracts between independent counterparties. Kalshi won't go bankrupt no matter how much you make there (though 'people' collectively will make negative [fees + taxes]).