Prediction markets are creating ripples in the financial and crypto world, especially as they intersect with betting on U.S. elections. The Commodity Futures Trading Commission (CFTC) is not happy. They are targeting platforms like Kalshi, which is fighting back against regulatory pushback.
This article explores Kalshi election odds, prediction markets, their connection to Kalshi election betting, and why the conflict between Kalshi and the CFTC could shape the future of this emerging industry.
What Are Prediction Markets?
Prediction markets are gaining visibility, yet many people aren’t familiar with them. At their core, prediction markets involve people speculating on future outcomes using money or goods as stakes. They have a long history as they reflect human nature’s gambling inclination and our fascination with the prospect of profiting from correctly guessing future outcomes.
Prediction markets trace back to ancient times, long before modern financial systems or formalized markets. While they weren’t called “prediction markets” at the time, they involved people speculating on future outcomes using money or goods as stakes. Examples include ancient Roman chariot races, gladiatorial games, and ancient Chinese and Indian gambling systems.
Prediction Markets Today
Today we see prediction market platforms such as Kalshi, Polymarket, and PredictIt enabling bidding on contracts tied to the outcome of future events. The contracts reflect the collective opinion of participants about the likelihood of an event, such as the results of an election, the outcome of a sports game, or the passage of legislation.
The reason why prediction markets are often more effective than surveys or polls has to do with the fact that aggregated opinions of many people are often more accurate than a few experts. Author James Surowiecki explored this concept of crowdsourcing as far back as 2004 in his book The Wisdom of Crowds.
The other reason that prediction markets tend to outperform other predictive tools is that people are incentivized to only participate if they have expertise. Unlike any random person with an opinion on social media or a pundit on mainstream media, prediction market participants risk losing money if they guess wrong.
What Is the Difference Between Gambling and Prediction Markets?
If you think that precision markets sound like another channel for gambling, you’re not alone. The overlap of the two is one of the reasons regulators are taking an interest. However, it’s essential to realize that there are several differences. Below are three of the main ones:
Purpose:
Gambling: People bet for fun, hoping to win money, usually based on luck or skill.
Prediction Markets: People bet to make predictions about real-world events, like elections or sports, to see what the group thinks will happen.
How Prices are Set:
Gambling: Bookmakers (the people running the game) set the odds and decide how much you can win.
Prediction Markets: Prices change based on what everyone is betting, showing the group’s opinion about what will happen.
Why It Matters:
Gambling: The goal is usually to make money, with no bigger impact.
Prediction Markets: The predictions not only benefit those who guess correctly but the market data can be used to make better decisions about things like politics or business, helping people understand what’s most likely to happen.
Why Is Election Betting Controversial?
Election betting is a specific type of prediction market where participants trade contracts based on the outcomes of elections, such as who will win a presidential race or control of Congress. These markets aim to reflect public sentiment and aggregate data on election probabilities, often offering insights that traditional polls might miss.
However, election betting is controversial. Critics argue that it raises ethical concerns, such as the potential to influence voter behavior or create financial incentives to manipulate election outcomes. For instance, some worry that high-stakes trading on elections might lead participants to spread misinformation to sway results.
Regulatory agencies like the CFTC take issue with election betting, questioning its legality under existing financial and gaming laws. The debate centers on whether these markets serve a public good by providing valuable information or are simply turning democracy into a wagering game.
Kalshi’s Role and Legal Battle with the CFTC
Unlike decentralized platforms like Polymarket, Kalshi is regulated by the CFTC and can legally operate in the United States. Even so, they are at the center of the election betting controversy.
Founded in 2018, Kalshi is built on a traditional tech stack and offers contracts tied to everyday events such as weather, economic data, and political outcomes, including Kalshi 2024 election contracts.
Kalshi wants to expand into the election betting space, proposing contracts tied to other U.S. elections. This move has drawn sharp resistance from the CFTC, which argues that such contracts may violate regulations and potentially undermine public trust in the electoral process.
Kalshi, however, contends that Congress—not the CFTC—should regulate election betting.
The company’s legal team has taken the fight to an appeals court, asserting that its election betting products are not gambling but structured financial contracts that provide valuable data to the public. On October 2, 2024, a US appeals court cleared Kalshi to restart election betting.
The outcome of this legal battle could have far-reaching implications, not only for Kalshi but for the broader prediction market industry. A decision in Kalshi’s favor could pave the way for other platforms to enter the election betting space, potentially driving further innovation—and regulation—in the field.
Why Prediction Markets Matter for Crypto Enthusiasts
Prediction markets are changing how people make guesses about the future, but they also bring new rules and challenges, especially in cryptocurrency.
Polymarket runs on the Polygon blockchain and is not available to US users, although many access it via a VPN. Kalshi runs on a traditional tech stack but began accepting USDC stablecoins in October 2024.
Because it is decentralized and transparent, blockchain could solve issues related to trust and centralized control in prediction markets, ensuring that transactions are secure, verifiable, and resistant to manipulation.
However, decentralized platforms also introduce regulatory and compliance challenges, as governments struggle to create rules and enforce them across international borders.
For crypto investors, it’s crucial to understand how prediction markets fit into the bigger picture. These markets could offer new ways to predict future events, like the way the stock market or crypto prices might go. However, they also face legal challenges that could affect how they operate.
As these markets grow, platforms like ZenLedger, which help with crypto tax reporting, will become even more important to make sure investors stay compliant with tax laws.
Cryptocurrency in prediction markets brings tax considerations that traders need to manage carefully. Gains from successful trades are taxable, just like profits from other crypto investments. Losses may also be deductible under certain conditions, but tracking these transactions across multiple platforms can be daunting.
Tools like ZenLedger streamline this process, enabling users to easily import trade histories, calculate gains or losses, and generate accurate tax reports.
Are you a crypto investor?
If you trade crypto assets, ZenLedger can help you stay organized for tax time. Our platform automatically aggregates transactions across your wallets and exchanges, computes your capital gain or loss, and generates the paperwork you need to file. This paperwork includes personal tokens you issue or purchase and the income or loss they generate.
Get started for free today!
The above is for general information purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
How Kalshi Prediction Market Platform Challenges Election Betting Regulations
Prediction markets are creating ripples in the financial and crypto world, especially as they intersect with betting on U.S. elections. The Commodity Futures Trading Commission (CFTC) is not happy. They are targeting platforms like Kalshi, which is fighting back against regulatory pushback.
This article explores Kalshi election odds, prediction markets, their connection to Kalshi election betting, and why the conflict between Kalshi and the CFTC could shape the future of this emerging industry.
What Are Prediction Markets?
Prediction markets are gaining visibility, yet many people aren’t familiar with them. At their core, prediction markets involve people speculating on future outcomes using money or goods as stakes. They have a long history as they reflect human nature’s gambling inclination and our fascination with the prospect of profiting from correctly guessing future outcomes.
Prediction markets trace back to ancient times, long before modern financial systems or formalized markets. While they weren’t called “prediction markets” at the time, they involved people speculating on future outcomes using money or goods as stakes. Examples include ancient Roman chariot races, gladiatorial games, and ancient Chinese and Indian gambling systems.
Prediction Markets Today
Today we see prediction market platforms such as Kalshi, Polymarket, and PredictIt enabling bidding on contracts tied to the outcome of future events. The contracts reflect the collective opinion of participants about the likelihood of an event, such as the results of an election, the outcome of a sports game, or the passage of legislation.
The reason why prediction markets are often more effective than surveys or polls has to do with the fact that aggregated opinions of many people are often more accurate than a few experts. Author James Surowiecki explored this concept of crowdsourcing as far back as 2004 in his book The Wisdom of Crowds.
The other reason that prediction markets tend to outperform other predictive tools is that people are incentivized to only participate if they have expertise. Unlike any random person with an opinion on social media or a pundit on mainstream media, prediction market participants risk losing money if they guess wrong.
What Is the Difference Between Gambling and Prediction Markets?
If you think that precision markets sound like another channel for gambling, you’re not alone. The overlap of the two is one of the reasons regulators are taking an interest. However, it’s essential to realize that there are several differences. Below are three of the main ones:
Purpose:
Gambling: People bet for fun, hoping to win money, usually based on luck or skill.
Prediction Markets: People bet to make predictions about real-world events, like elections or sports, to see what the group thinks will happen.
How Prices are Set:
Gambling: Bookmakers (the people running the game) set the odds and decide how much you can win.
Prediction Markets: Prices change based on what everyone is betting, showing the group’s opinion about what will happen.
Why It Matters:
Gambling: The goal is usually to make money, with no bigger impact.
Prediction Markets: The predictions not only benefit those who guess correctly but the market data can be used to make better decisions about things like politics or business, helping people understand what’s most likely to happen.
Why Is Election Betting Controversial?
Election betting is a specific type of prediction market where participants trade contracts based on the outcomes of elections, such as who will win a presidential race or control of Congress. These markets aim to reflect public sentiment and aggregate data on election probabilities, often offering insights that traditional polls might miss.
However, election betting is controversial. Critics argue that it raises ethical concerns, such as the potential to influence voter behavior or create financial incentives to manipulate election outcomes. For instance, some worry that high-stakes trading on elections might lead participants to spread misinformation to sway results.
Regulatory agencies like the CFTC take issue with election betting, questioning its legality under existing financial and gaming laws. The debate centers on whether these markets serve a public good by providing valuable information or are simply turning democracy into a wagering game.
Kalshi’s Role and Legal Battle with the CFTC
Unlike decentralized platforms like Polymarket, Kalshi is regulated by the CFTC and can legally operate in the United States. Even so, they are at the center of the election betting controversy.
Founded in 2018, Kalshi is built on a traditional tech stack and offers contracts tied to everyday events such as weather, economic data, and political outcomes, including Kalshi 2024 election contracts.
Kalshi wants to expand into the election betting space, proposing contracts tied to other U.S. elections. This move has drawn sharp resistance from the CFTC, which argues that such contracts may violate regulations and potentially undermine public trust in the electoral process.
Kalshi, however, contends that Congress—not the CFTC—should regulate election betting.
The company’s legal team has taken the fight to an appeals court, asserting that its election betting products are not gambling but structured financial contracts that provide valuable data to the public. On October 2, 2024, a US appeals court cleared Kalshi to restart election betting.
The outcome of this legal battle could have far-reaching implications, not only for Kalshi but for the broader prediction market industry. A decision in Kalshi’s favor could pave the way for other platforms to enter the election betting space, potentially driving further innovation—and regulation—in the field.
Why Prediction Markets Matter for Crypto Enthusiasts
Prediction markets are changing how people make guesses about the future, but they also bring new rules and challenges, especially in cryptocurrency.
Polymarket runs on the Polygon blockchain and is not available to US users, although many access it via a VPN. Kalshi runs on a traditional tech stack but began accepting USDC stablecoins in October 2024.
Because it is decentralized and transparent, blockchain could solve issues related to trust and centralized control in prediction markets, ensuring that transactions are secure, verifiable, and resistant to manipulation.
However, decentralized platforms also introduce regulatory and compliance challenges, as governments struggle to create rules and enforce them across international borders.
For crypto investors, it’s crucial to understand how prediction markets fit into the bigger picture. These markets could offer new ways to predict future events, like the way the stock market or crypto prices might go. However, they also face legal challenges that could affect how they operate.
As these markets grow, platforms like ZenLedger, which help with crypto tax reporting, will become even more important to make sure investors stay compliant with tax laws.
Cryptocurrency in prediction markets brings tax considerations that traders need to manage carefully. Gains from successful trades are taxable, just like profits from other crypto investments. Losses may also be deductible under certain conditions, but tracking these transactions across multiple platforms can be daunting.
Tools like ZenLedger streamline this process, enabling users to easily import trade histories, calculate gains or losses, and generate accurate tax reports.
Are you a crypto investor?
If you trade crypto assets, ZenLedger can help you stay organized for tax time. Our platform automatically aggregates transactions across your wallets and exchanges, computes your capital gain or loss, and generates the paperwork you need to file. This paperwork includes personal tokens you issue or purchase and the income or loss they generate.
Get started for free today!
The above is for general information purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
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