The rise of prediction markets in the las few years has been dramatic and very quick. Markets like Kalshi and Polymarket have risen in popularity, along with online betting, to become one of the newest ways to gamble on anything. When we say anything, we mean very literally, almost anything. You can gamble on how many cars will pass through a traffic light in certain cities, you can bet on the weather, anything is fair game.

While gambling is a pastime, these prediction market types have become somewhat questionable. They allow you to bet on politics, which can be shady enough, not to mention the potential insider trading that can occur with it. There has not been much in the way of regulating these markets, and with their rapid rise, they are looking now to branch out for national influence.

In turn, many states have filed lawsuits to stop these prediction markets from flooding into their states. Kalshi alone last month reported processing $17.9 billion in trading volume. They are huge money makers for the companies that bring not much value to a state economy, unlike actual physical casinos. Rightly so, the states want to stop it, but the prediction markets are not going away.

Economist Joel Griffith says the prediction markets are now lobbying at the national level to get their way.

"They have successfully lobbied the Commodities and Futures Trading Commission (CFTC) to attempt to seize for itself the ability to regulate these markets," he says.

Think about that for a moment. A prediction market regulating itself. That reeks of potential abuse, fraud, insider trading, and a whole host of issues. Guaranteed issues? No, but the opportunity is there for it.

There is an even bigger problem, though. They can lobby to the CTFC for this self-regulating power, but you would think the CFTC would be able to issue guidelines or at least keep them in check. Alas, you would be incorrect.

"Congress, which created the CFTC, never gave them the power to regulate gambling," says Griffith. "They have a very narrow power to regular aspects of the financial markets, namely, the commodities and futures markets."

Those markets they control fall more under the stock market than they do gambling. Sure, while the stock market is relative to gambling, it is not the same as betting money on the temperature or who will win an election.

In the end, the states have the right to choose if they want gambling or not, and they are deciding they do not want this particular form of it. Mostly because, once again, it is not something that really contributes to a thriving economy. The states really want to protect their people and economic interests as a whole.

"We have seen Americans gamble away billions of dollars, and these gambling operators are getting rich," Griffith says.

As for how these lawsuits will play out, they are currently in their state courts. No matter the ruling, there will certainly be appeals to federal court. Ultimately, Griffith says, these cases will end up in the hands of the Supreme Court.

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