FTC Sports Gambling Probe To Exclude Kalshi, Polymarket

Kalshi and Polymarket won't be part of FTC sports gambling probe according to a new report.

The review comes as the online sports betting industry both platforms occupy has grown rapidly; multiple reports tracking the Federal Trade Commission (FTC) story describe it as a roughly $167 billion sector with tens of millions of active users. 

DraftKings has said it has not received a Civil Investigative Demand from the agency, and the FTC itself has declined to comment publicly on the review, which remains preliminary and unconfirmed by the regulator.

Early-Stage Review

The U.S. Federal Trade Commission has begun an early-stage review of the online sports gambling industry that is expected to exclude prediction market platforms Kalshi and Polymarket, focusing instead on traditional sportsbooks such as DraftKings and FanDuel, according to a report from The Washington Sun.

The review is reportedly centered on allegations of deceptive or misleading advertising rather than the legality of sports betting itself, with the agency said to be examining marketing practices "alarmed by its effect on young men."

Why Prediction Markets Are Being Left Out

Neither Kalshi nor Polymarket consider themselves gambling operators; both argue they run open financial markets matching buyers and sellers of event contracts, and both have pushed to be regulated federally by the Commodity Futures Trading Commission rather than under state gambling law. 

Kalshi CEO Tarek Mansour has argued that prediction markets aren't gambling "because it is an open financial market that matches buyers and sellers."

The carve-out comes as both platforms face a wave of state-level legal challenges. New York has sued Kalshi and Polymarket this year, alleging they are running an illegal gambling operation that encourages problem gambling among users under 21. 

Polymarket's suit cited research from the National Institutes of Health and the American Psychological Association linking pathological gambling to mental health disorders, suicidal behavior and substance abuse.

Political Ties In The Background

Donald Trump Jr. holds advisory roles at both Kalshi and Polymarket. He holds $300,000 worth of Kalshi shares, and his investment firm 1789 Capital has invested $500 million in Polymarket, a detail that has drawn scrutiny given the administration overseeing the FTC's review.

The FTC has not confirmed the review publicly, and neither DraftKings nor FanDuel has been served with a formal request, according to the report.