Prediction Markets Expand Equity Wagers Amid Regulatory Dispute
Prediction platforms Polymarket and Kalshi are expanding equity-linked wagers on US companies, sparking a jurisdictional battle between the CFTC and the SEC.
Prediction market platforms, led by Polymarket and Kalshi, have expanded their offerings to include equity-linked wagers on major US companies such as Nvidia, Apple, and Tesla. Data from Allium shows traders bet over $220 million across approximately 31,000 equity-linked markets through early September, with most activity focused on individual stock movements.
This growth has triggered a regulatory dispute over which federal agency holds oversight. The Commodity Futures Trading Commission claims authority based on the derivative nature of the contracts. However, critics and lawmakers argue that the Securities and Exchange Commission should lead regulation to ensure investor protection and prevent platforms from operating outside the surveillance rules of regulated exchanges.
Senator Adam Schiff warned that the industry should not be allowed to sidestep securities laws by using prediction contracts as a guise for traditional financial products. While Polymarket and Kalshi state they monitor for misconduct and collaborate with regulators, Polymarket's offshore structure continues to complicate oversight within the United States.
