Tong's Portfolio: The political economy of gambling and prediction markets
A new column in The Edge Malaysia examines the political economy of prediction markets, exploring how the rise of platforms such as Kalshi and Polymarket has blurred the line between gambling and socially accepted betting. The piece focuses on who decides which wagers society deems legitimate. Separately, media coverage notes that conflicting court rulings have deepened regulatory uncertainty around prediction markets, though specifics of the rulings were not detailed in available text.
The Edge Malaysia column surfaces a framing problem that prediction market operators now face in courtrooms and legislatures. Kalshi and Polymarket are CFTC-registered, yet state attorneys general and judges increasingly treat their contracts as gambling. The Nevada appeals ruling strips federal preemption protection for sports-linked contracts, while the CFTC simultaneously cracks down on American-style odds displays. That dual pressure pushes platforms to spend on compliance redesigns while defending state-by-state.
The political economy question matters because it shifts the battlefield from regulatory technicalities to moral legitimacy. If society classifies these contracts as gambling, CFTC registration becomes a secondary shield. Traders then hold positions whose validity depends on shifting public sentiment, not settled law. Kalshi's youth volume and Polymarket's political markets give opponents vivid case studies. The platforms must now win legitimacy debates in state capitals, not just file federal disclosures.