This post begins with an image of a gambler and a commodity futures trader. But if you think the two people are identical, you are sadly mistaken.
Because commodity futures trading is obviously NOT gambling.
And anyone who says “Polymarket and Kalshi are gambling apps” is clearly misinformed.
The two referenced apps are part of the prediction market. People buy particular predictions that either make or lose money.
The fact that these predictions are not tangible commodities, but instead relate to future events such as sports games, is entirely coincidental and immaterial to how these apps should be regulated.
Despite what several states claim, regulation of prediction apps properly falls under the Commodity Futures Trading Commission (CFTC), as explained by the President of the United States in a statement.
“It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive. Under my leadership, we are setting “rules of the road” that are the Gold Standard for the States. We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules! Other Countries are after this new form of Financial Market, and we want to remain at the top.”
Under current federal law (state law is a different issue), markets regulated by the CFTC are legal in all 50 states.
Mere gambling apps use geolocation to determine whether a user can legally place a bet. For example, if an app is only legal in Nevada, you technically shouldn’t be able to use it if you and your smartphone are in Bullhead City, Arizona, or anywhere else outside Nevada.
People in CFTC markets don’t have to worry about geolocation, since they can be used in Alabama, or Oregon, or Illinois.
Or do they need to worry?
Polymarket and Virtual Private Networks (VPNs)
Anthony Kimery of Biometric Update wrote an article about “Polymarket’s VPN Crackdown.” Reportedly Polymarket is implementing “tighter enforcement against VPN use.”
“But wait, John,” you’re asking. “Who would use a VPN if Polymarket is legal in all 50 states?”
People located in any of 200 or so other countries.
“Polymarket is reportedly blocked or restricted in dozens of countries.
“And this makes VPN detection a central compliance issue. A platform can say it does not allow access from restricted jurisdictions, but that policy is only as strong as its ability to detect users who mask their location.”
Of course any restrictions to prevent illegitimate users also cause adverse friction for legitimate users. In the long term:
“The larger takeaway is that prediction markets are being pushed toward a compliance architecture that looks much more like financial services than the open, permissionless model associated with decentralized crypto platforms.”
So prediction markets, like crypto, are becoming less of a “wild West” and more of a regulated area where everybody, including federal regulators, knows your name.
Bredemarket 