> isn't the idea that prediction markets surface private knowledge a big part of the defense as to why they shouldn't be treated as illegal gambling

No. Their defense is that they are a gamified platform for futures contracts and hence should fall under CFTC regulation.

The CFTC also cracks down on insider trading, but it took time for them to write regulations to catch up with prediction markets.

It is now a priority [0] and they have just started a paid whistleblower [1] programs specifically to catch insider traders within prediction markets.

[0] - https://www.lw.com/en/insights/new-cftc-enforcement-director...

[1] - https://www.whistleblower.gov/whistleblower-alerts/Insider_T...

▲

ssharp 4 hours ago | parent | next [-]

On the Polymarket homepage right now, one of the featured markets is whether or not Bitcoin will be up or down over the next 5 minutes. It's hard to justify that as anything more than illegal gambling.

I find prediction markets to be interesting on two fronts:

1) They like a really good way to determine the probability of something happening, which is interesting for events like elections

2) It provides an avenue for smart bettors to take advantage and sharpen their skill, whereas they get severely limited or banned from traditional sports books

However, it seems like all incentive structures for the markets and consumer behavior will steer these things to degenerate gambling.

▲

Karrot_Kream 4 hours ago | parent [-]

Polymarket is not CFTC regulated, it's considered illegal in the US. CFTC does not allow betting on securities prices. Cryptocurrency is a bit of a gray area because it's not considered a registered security.

N.B. it becomes a bit frustrating to talk about financial and regulatory things on this site because the level of knowledge is generally "I read some articles on social media about markets" level.

	▲	alephnerd 3 hours ago \| parent [-]
		> Cryptocurrency is a bit of a gray area because it's not considered a registered security Additionally, the SEC and CFTC guidance on what digital asset can be treated as a security and what can be treated as a commodity was only released a couple weeks ago [0]. Stuff is changing rapidly so it's best to keep an experienced regulatory lawyer on retainer. > N.B. it becomes a bit frustrating to talk about financial and regulatory things on this site because the level of knowledge is generally "I read some articles on social media about markets" level. Yep. It is what it is. [0] - https://www.morganlewis.com/pubs/2026/03/crypto-clarity-sec-...

▲

SpaceManNabs 3 hours ago | parent | prev [-]

> Their defense is that they are a gamified futures contracts and hence should fall under CFTC regulation.

That might be the defense. They are inherently designed to leverage insider trading though. I made a top level comment with links/resources that argues why.