- The FTC probe into deceptive practices in online sports gambling will target sportsbooks like DraftKings and FanDuel, not prediction markets Kalshi and Polymarket
- New York has sued both Kalshi and Polymarket this year, accusing them of running illegal gambling operations that encourage problem gambling among under-21s
- CEOs of both platforms argue prediction markets are not gambling but regulated financial derivatives, distinct from sportsbook operations
- Donald Trump Jr. holds advisory roles and significant investments in both Kalshi and Polymarket
The Federal Trade Commission’s probe into deceptive practices in the $167 million online sports gambling industry will reportedly exclude crypto-linked prediction markets Kalshi and Polymarket, focusing instead on sportsbooks like DraftKings and FanDuel. According to sources familiar with the matter, the investigation is in its early stages and will examine misleading advertisements as well as suicides, hospitalizations, and bankruptcies linked to the industry.
Meanwhile, both Polymarket and Kalshi are already under the scope of an insider trading probe led by Republican House Oversight Committee member James Comer. The state of New York has also sued Kalshi and Polymarket this year, accusing them of running illegal gambling operations that encourage problem gambling among people under 21. New York’s lawsuit against Polymarket highlighted a study from the National Institutes of Health linking pathological gambling to mental health disorders and suicidal behaviors.
Kalshi CEO Tarek Mansour argued that prediction markets are not gambling because they are open financial markets matching buyers and sellers, as seen in a tweet from October 2026. Similarly, Polymarket CEO Shayne Coplan called DraftKings and FanDuel a sportsbook “duopoly” that acts against winning bettors, stating that his platform offers derivatives and should be regulated under the Commodity Futures Trading Commission, not as gambling. Both firms hope to avoid state gambling regulation and maintain federal oversight.
President Donald Trump’s son Donald Trump Jr. holds advisory roles in both firms, with $300,000 worth of Kalshi shares and his investment firm 1789 Capital investing $500 million in Polymarket. Neither firm is currently a focus of the FTC probe.
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